Q. It's asking me how did I use the money? I am asking, what box do I choose if the money was sent to me because the account was closed out? You said to "pick you did something else with it like cashed it out." This is where I got lost.
A. You seem to be hoping that "the account was closed out" qualifies as a reason the distribution will not be taxable or, at least, not subject to the 10% early withdrawal (under age 59.5) penalty. It isn't.
You had 60 days to roll that money over to another qualified account (usually an IRA). If you didn't, TurboTax (TT) will treat it as taxable distribution and prepare form 5329 to calculate the penalty.
There are only two choices on the what did you do with the money question. You rolled it over or you didn't.
