In 2019, I contributed $6000 to my Roth IRA. I then found out my MAGI was too high to allow the maximum contribution, so I withdrew exactly the amount of the excess contribution + earnings of $60. However, now that the $60 is part of my taxable income, my MAGI is higher, and TurboTax is saying I owe a $1 penalty on the excess $10 remaining in my Roth IRA. It seems like I'm going to owe this extra $1 every year until I withdraw it, but I'm not sure if I can request an additional withdrawal from my plan administrator. How do I fix this? (I realize we're talking about a dollar here, but would like to fix it if it's straightforward.)
Yes, TurboTax is correct. An unfortunate consequence of being in the phase-out range for a Roth IRA contribution is that the taxable earnings indeed increase your MAGI resulting in an additional excess contribution. You can obtain a return of the additional $10 excess contribution (plus perhaps some slight additional amount to account for the earnings on the $10 that will add a bit more to your MAGI), or you can just pay the $1 penalty and resolve the $10 excess in 2020 by either applying the $10 as part of your 2020 Roth IRA contribution or by obtaining a regular distribution of $10 after October 15, 2020 but before the end of 2020.
To make a more precise guess at the amount to have returned you can estimate the investment gain on the $10 and add that to the $60 you've already entered. After a few iterations the result will converge.