Hate to ask at a busy time, but if anyone has any suggestions they would be appreciated. Thanks for any tips, however brief.

Facts:
Roth contributions of $6,000 + $6,000 (spousal) were made in January 2012 but 2012 taxable compensation turned out to only be $10,000 due to $6,000 in 403b contributions. The earned income was sufficient ($16,000), but from what I can tell it is TAXABLE income that counts for Roth IRA earnings. Thus, in the case above, an excess contribution of $2,000 was made. Is that correct?

I have seen confusing language about extensions related to the deadline to make a withdrawal before the 6% excise tax kicks in. At first I thought it meant that you had to apply for an automatic 6 month extension if the withdrawal is not made by April 15. The paragraph below seems to suggest that this would not be necessary:

To correct an excess contribution, an individual must remove the excess amount and any applicable income from the IRA by the owner’s tax-filing deadline, which is generally April 15. But if you miss the April 15 deadline, you may still be able to make the correction, as {{individuals who file tax returns by April 15 receive an automatic six-month extension on the deadline for removing the excess amount}}.

http://www.investopedia.com/articles/retirement/04/033104.asp

Do you think it is safe to go past April 15 without filing an extension?

Finally, it seems logical that the withdrawal of $2,000 (plus investment return) to correct the excess contribution could come from either spouse’s Roth IRA but just in case I was thinking that it might be better to withdraw $1,000 (plus return) from each Roth IRA. Hate to be paranoid but have learned the hard way over the years to assume nothing when it comes to tax rules.

Also, it sounds like the $2,000 or so should be reported as if from a 1099-R (even if it hasn’t been issued yet) on this year’s (2012) return. I am thinking it would be OK to construct one even though the information has yet to be sent to the IRS in a real 1099-R:

When you choose this method of correction, you’re required to report and pay tax on the net income attributable to the excess in the year of the contribution, even if you take it out during the following year, before the return due date. The earnings will be taxed like any other taxable distribution of earnings from a Roth IRA, and will be subject to the early distribution penalty if you’re under 59½ unless an exception applies.

So I think the 2012 1099-R should have, e.g., at a 3% return for 1 year, $2,060 in box 1 & $60 in Box 2a. Not sure what the Distribution code should be.

P.S. I thought this was interesting and can imagine people assuming that you should calculate the return on just the account that the excess was deposited into:

Earnings Are Prorated
A common mistake when calculating excess contributions is to assume that the earnings apply only to the assets in which the contribution was invested. This is not the case. The earnings on excess IRA contributions are determined for the period during which the excess amount remained in the IRA, {{taking into account the performance of all the assets in the IRA}}.

http://www.investopedia.com/articles/retirement/04/042804.asp

By “the IRA”, the example calculations take that to mean all tIRA or Roth accounts. A person could calculate a weighted rate of return for all IRA (or Roth IRA) assets spread across multiple accounts and then multiply that by the excess contribution (or you can try the formula issued in TD 9056).