I just worked through this issue in detail on my NY state return. It turns out that in Box 14, if you are a state employee that participates in the retirement plan, you'll see 414H or something similar on your W2. In the drop-down menu in Turbo Tax there are 2 options for 414H, one for 414(h) taxable and one for 414(h) tax exempt. The problem appears to be that Turbo Tax is coded to parse the value you type into box 14 and try to select the correct value. So, if you just type 414H in the box, it doesn't matter what you pick from the drop-down, the software will override your selection and make it the 414(h) Tax Exempt and that is why it can't be e-filed. However, most people with 414(h) contributions are taxable (see https://tax.custhelp.com/app/answers/detail/a_id/603/~/are-public-employee-414%28h%29-contributions-...). In order to get Turbo Tax to not override your entry, you need to enter 414HNOT in the Box 14 and then choose the 414(h) Taxable from the drop-down. It should then allow you to efile.
