This sometimes happens, that the taxpayer has made excess HSA contributions, but there is no longer enough cash in the HSA to cover it in the withdrawal.
In this case, withdraw what you can, and TurboTax will carry over the remaining amount (278 in your case) to your 2025 return as an excess HSA contribution carryover. Yes, this amount will be charged 6% on your 2024 return.
But what this will do is give you a chance to use the carryover amount as a personal contribution in 2025. That is, the 278 will be used as a "personal contribution" (line 2 of the 8889 in 2025), so make sure that whatever else you contribute in 2025 plus 278 is less than your HSA contribution limit.
Conversely, depending on your needs, you can carry over the entire 500 (don't withdraw anything), pay the 6% (which is not a lot when you think about it), and then make sure that you have room for the 500 contribution under your 2025 limit.
To be clear, the tax is on the carryover amount, not what is in your HSA.
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