Found out that there is no error. California adds a 2.5% "premature withdrawal" tax on IRA rollovers to HSAs. The TurboTax program called that an "early withdrawal" tax, hence the confusion.
June 1, 2019 8:17 AM
The California 2.5% additional tax does not apply to someone over age 59½. What *does* apply is that an HSA Funding Distribution is taxable in California because HSA contributions are not excludible from income in California.