What TurboTax told you is that you don't pay extra taxes, i.e., an early distribution penalty (an excise tax) on the distribution. The distribution still adds to your taxable income on which you owe ordinary income tax. The amount of taxes withheld from the distribution does not take into account the actual marginal tax rate that can only be determined by preparing your tax return, so the default withholding was not sufficient to cover your marginal tax rate for this distribution. You own the additional amount of ordinary income tax with your tax return.
