Yes, you would choose "premature" withdrawal.
The IRS will know that you removed the excess contribution when you enter the 2026 Form 1099-R on your 2026 return. This entry will go on line 20 of the 2026 Form 5329 and then resolve the excess contribution carried over from 2025 on line 18 of the 2026 Form 5329.
Next year, on your 2026 return after you enter all Form 1099-Rs you will click continue and then get a question about your prior Roth IRA contributions. Here you will include the excess contribution amount with any other Roth IRA contributions. You can withdraw contribution anytime tax- and penalty-free. Therefore, this distribution will be tax- and penalty-free.
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