Answer: "No, we are not going to make this withdrawal". This is because, as TurboTax pointed out, you can't withdraw as an "excess contribution" a carryover of excess from a previous year.
1c) Oddly, when you make that withdrawal for a carryover in the years after the initial excess, you don't worry about the interest and earnings. That's what the 20% penalty is for.
All the withdrawal for non-medical expenses has to cover is the original excess amount (the $54 in your case) that is being carried over.
Form 5329 will figure out what you have done, and erase the carryover. It will, I promise.
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