Excess Roth IRA Contributions

[Jake Kucheck]

Some holiday tax planning raised the following question:

Back in the glory days of yesteryear, when I had an Edward Jones guy, I unfortunately found myself overallocated in my Roth IRA, and attached to my return was a harsh note indicating that I needed to remove the excess amount immediately. In that particular tax year, I had no gains in my Roth IRA (I did however, have significant losses), so the amount attributable to the gain was moot, but the excess contribution (what was left of it) remained.

My question is- other than the 6% penalty on excess contribution (and the attributable gains), is there any penalty for utilizing ROTH funds as a tax free growth vehicle if you are over age 59 1/2?

Thus, could you theoretically dump $100K into a ROTH, knowing full well that it was in excess of your contribution limit (let's call this zero, due to a MAGI for a married filer in excess of $179K), but simply removing the excess (and attributable gain) tax free prior to filing the next year. Or, if you couldn't do this, could you leave the excess gain in the ROTH, electing to pay the 6% penalty, knowing that you would have to generate a return well in excess of 6% in order to justify this particular vehicle?

Hoping Steven the Tax Guy has an answer to this...