@Hal_Al
@craig white
I would file a regular tax return, because it can be e-filed. A 5329 by itself can only be filed by mail and the IRS is very backlogged on paper returns.
Because of how the 7.5% threshold works, you either need to cover some of the expenses yourself or pay a little tax. If your medical expenses were $3000 exactly and you withdrew $3000, then your AGI is $3000 and 7.5% of your AGI is $225. That means that only $2775 of the withdrawal is qualified for the exception and you would owe $23 as a 10% penalty.
If Turbotax tries to charge you to file your return because it includes a "situation not included in free Turbotax" (i.e. the form 5329), I would look for another software provider that has free filing for low income taxpayers.
