Hi, Al – where have you been? Working too hard?

Good question, never have seen this one asked before. The short answer is that the earnings are taxable. Here is the longer explanation:
While Pub 590 could have referred to this situation in more than one Roth topic, the answer is on p 64 in somewhat nebulous form,
“Withdrawal of Excess Contributions”. The rules for excess contributions supercede both the ordering rules if the Roth is not yet qualified, and the tax free treatment that qualified distributions receive.

P. 64 indicates that the excess contribution, if withdrawn along with earnings by the extended due date is treated as an amount not contributed. At this point, the paragraph fails to completely state that these earnings are taxable, but if the contribution that produced them is treated as not contributed, then the earnings cannot be treated as Roth earnings and would then be taxable.

This is also the only logical conclusion, as tax free earnings could result in a taxpayer contributing a couple million, make 50,000 in earnings and then withdraw the entire amount tax fee – a little too easy.

And here is the more conclusive copy of the IRS Regs 1.408A-6 Q&A 1: (see item (d))
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Q–1. How are distributions from Roth IRAs taxed?

A–1. (a) The taxability of a distribution from a Roth IRA generally depends on whether or not the distribution is a qualified distribution. This A–1 provides rules for qualified distributions and certain other nontaxable distributions. A–4 of this section provides rules for the taxability of distributions that are not qualified distributions.

(b) A distribution from a Roth IRA is not includible in the owner’s gross income if it is a qualified distribution or to the extent that it is a return of the owner’s contributions to the Roth IRA (determined in accordance with A–8 of this section). A qualified distribution is one that is both—

(1) Made after a 5-taxable-year period (defined in A–2 of this section); and

(2) Made on or after the date on which the owner attains age 59 1/2, made to a beneficiary or the estate of the owner on or after the date of the owner’s death, attributable to the owner’s being disabled within the meaning of section 72(m)(7), or to which section 72(t)(2)(F) applies (exception for first-time home purchase).

(c) An amount distributed from a Roth IRA will not be included in gross income to the extent it is rolled over to another Roth IRA on a tax-free basis under the rules of sections 408(d)(3) and 408A(e).

(d) Contributions that are returned to the Roth IRA owner in accordance with section 408(d)(4) (corrective distributions) are not includible in gross income, but any net income required to be distributed under section 408(d)(4) together with the contributions is includible in gross income for the taxable year in which the contributions were made.

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