The point would be to remove it Timely, so that it doesn't become a problem. You don't want to report it, because that removes the timeliness from the activity. When the 1099-R comes out for 2021, it will be flagged for code = Previous year. You report it for 2020. You also will report any removed earnings for 2021, because the removal happens in 2021. The removal of the contribution only happens once; the earnings are taxed in both years, or for as long as they are not removed.