Delayed Excess Contribution Transfer

[Guest royboy11]

In April of 2000 I had to remove excess contributions from my Roth IRA. My custodian figured up the amount with the earnings attributed to the excess contribution. However I choose for the withdrawal to be in mutual fund shares. They forwarded on the request to the mutual fund company, but by the time the mutual fund got around to the actual transfer the value of those shares had dropped.

So today on my 1099-R form my custodian claims I should pay tax on the amount they figured up, not the actual dollar value transferred 3 weeks later into the mutual fund.

My custodian claims for tax purposes I should use there "as of" date calculation. Is this correct?

Example: Custodian figures and reports $2,000 plus say $800 in earnings on the 1099-R.

The actual amount (transferred 3 weeks later) was $2,000 plus say $600 in earnings, because the value of the shares they were told to transfer has dropped.

So now I owe tax on $800 but only actually received $600 in excess earnings. Is this the correct way to look at a delayed transfer situation like this?