Roth IRA excess contribution question

[nittanycheme]

So, as a result of some job changes and bonuses this year, my DH and I were in the phase out area for the Roth IRA contribution.  I was within the allowable amount, but my DH was not.   I sent him to his financial guy to have him withdrawal the excess contribution and its earnings from his 2012 contribution.  However, his advisor didn't just withdrawal the excess contribution and its earnings; he withdraw his entire 2012 contribution and its earnings.  Does anyone have any advice on how to handle this issue?  My thoughts are:
1) write in this year's taxes the excess amount that was withdrawn as required.
2) figure out for this year's taxes the earnings applicable to the excess contributions withdrawn, and pay taxes on that amount
3) call the rest a withdrawal of contributions (he has plenty of previous contributions to cover that amount)

Thanks for any help you can give.

[mwcpa]

the 2012 excess withdrawals "earnings" will be taxed in 2013.....not 2012, unless he took the money in 2012.... a 1099 should have been issued.

did he cash the check from the broker?  if he did and he claims the IRA for 2012 (the reduced allowed amount) the withdrawal above the excess (and the earnings on that) will be a premature distribution subject to the 10% early withdrawal penalty, if he is not over 59 1/2.

I would immediately deposit the non excess amount (assuming you want the break for 2012) and it's eanrings back into an IRA and have it treated as a rollover (assuming it is done within 60 days of the mess up by the broker).