"What I don't understand is why the insurance company is still coding these annual withdrawals as 1D."
That's a question for the annuity company. It doesn't make any sense that they would continue to use code 1 since the SEPP plan effectively terminated when you reached age 59½ after having already completed 5 years under the plan. They should know that. Code 1 can be used to indicate a modification of the SEPP plan even when over age 59½, but since you had met requirements for being able to terminate the SEPP plan without penalty, they should know that your additional distribution in 2025 implied termination of the SEPP plan.
With the code-1D Form 1099-R, you can claim a code 12 exception on Form 5329 line 2, "Distributions incorrectly indicated as early distributions by code 1, J, or S in box 7 of Form 1099-R."
