While researching this online I got the following response, which further points to this being a bug in TurboTax.
Penalty on Roth IRA Excess Contribution Earnings
General Rule
When you withdraw excess contributions from a Roth IRA, any earnings generated from those contributions may be subject to a 10% additional tax if the withdrawal does not meet certain conditions. This tax applies if the distribution is considered an early withdrawal and does not qualify for an exception.
Conditions for Avoiding the 10% Penalty
To avoid the 10% penalty on earnings from excess contributions, you must:
Withdraw the excess contribution and any earnings before the tax-filing deadline (typically April 15, or October 15 if you file for an extension).
Ensure that the earnings are reported as taxable income in the year the excess contribution was made.
