When you indicate that part of the distribution was RMD, TurboTax subtracts from the the gross amount the amount that you indicate was RMD and then permits the remainder to be reported as rolled over. The ONLY reason TurboTax asks this particular RMD question is to determine how much is eligible to be reported as having been rolled over. TurboTax later separately asks if you completed all of the RMD for the year, which for 2020 the answer is yes.
