Correct. Payment of the 6% excess contribution penalty and the need to distribute earnings are mutually exclusive. The need to distribute earnings is only mentioned in the statute regarding a return of contribution before the due date of the tax return.
I made an omission in my discussion of the deadline for removal of the excess contribution before the due date of the 2017 tax return. As long as the 2017 tax return was timely filed or an extension was timely requested, the deadline for the return of the excess contribution made for 2017 was October 15, 2018 and the distribution on April 18, 2018 was certainly before that (and I'm not sure why the custodian would not have completed the distribution as a return of contribution if that is what was requested). I'm not remembering my entire train of thought, but the fact that the distribution occurred before the extended due date is probably why I didn't originally consider treating the distribution as a return of contribution after the due date of the 2017 tax return.
