EARNINGS ON EXCESS ROTH IRA CONTRIBUTION

[Guest Jamie8]

I have a single client who contributed $3,000 to his ROTH in 2004 and now we have found that his MAGI is in the phase out range. He has decided that he wants to withdraw the excess contribution (with earnings). Question - will the earnings on the excess contribution (required to be taxed in 2004) cause the MAGI to increase and create a circular calculation with respect to the maximum allowable contribution? I can find no guidance on the earnings on excess contributions with respect to the MAGI, so I presume the amount is includable in MAGI. ANY HELP IS MUCH APPRECIATED. THANKS.