It appears this is investment income. Investment income would not be included in exempt income.
The exemption codes on your Form 1042-S are linked to withholding requirements on the payer, not exempt income to the recipient.
You should report this as income from a 1099-R however you may have problems efiling as you do not have all the information for Fidelity you would need to complete the 1099-R form.
For 2020, there is an exemption of up to $100,000 of withdrawals from 401(k) accounts from the 10% early withdrawal penalty.
You could add this withdrawal as Less Common Income, Miscellaneous Income, Other Taxable Income and still be able to efile.
