Retirement tax questions

No because distributions and contributions are two different things and one cannot offset the other especially in a case where the contribution is limited because of AGI considerations. As a result, you should withdraw the contribution to avoid the 6% penalty for making the excess contribution. After making arrangements with the trustee to pay back the excess, here is how to report in Turbo Tax according to irene2805 in her awesome Turbo Tax post.

TurboTax Online

1. Click on Federal > Wages & Income.
2. Scroll down to the Retirement Plans and Social Security section and click on the Start/Revisit box next to IRA, 4701(k), Pension Plan Withdrawals (1099-R). 
3. If you've already entered one (or more) 1099-Rs, you will see a screen Your 1099-R Entries.  Click the Edit link next to the 1099-R you wish to review.   
4. On the screen, Tell us if you moved the money through a rollover or conversion, mark the radio button,  I rolled over some of all of it to an IRA... and click Continue.
5. A few screens after the 1099-R input screen, you should see a screen, What Did You Do With The Money From 401k institution?  Mark the radio button next to I moved the money to another retirement account (or returned it to the same retirement account).  
6. On the next screen, Did you rollover the gross amount of $XX (Box 1)...  mark the appropriate radio button and click Continue.

TurboTax CD/Download

1. Click Federal Taxes > Wages & Income > I'll choose what I work on
2. Scroll down to the Retirement Plans and Social Security section and click on the Start/Revisit box next to IRA, 4701(k), Pension Plan Withdrawals (1099-R). 
3. If you've already entered one (or more) 1099-Rs, you will see a screen Your 1099-R Entries.  Click on the Edit link next to the 1099-R you wish to review.   
4. A few screens after the 1099-R input screen, you should see a screen, What Did You Do With The Money From this Payer?
5. Mark the radio button next to I moved the money to another retirement account (or returned it to the same account).
6. Below the grey line, click the radio button next to I rolled over all of this money to an IRA or other retirement account (or returned it to the same account).  Click Continue