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Did your wife get a W-2? You said she received $20,000 the first year because it was for only half the year so her salary may be on the W-2.

Money coming from a university would not be an IRA. Check your entry. The IRA/SEP/SIMPLE box should not be checked. If the IRA box is unchecked, TurboTax will treat it as a pension and ask you additional questions so continue through the screens again.

If this was a buyout her age probably will not matter. There is a 10% early withdrawal penalty for distributions before age 59 ½ from a retirement plan. So if part of the payment came from a retirement plan she meets the age requirement to be exempt from the penalty.