If this is a code 7 distribution then I think you went down a wrong path somewhere since you should not be seeing any of those questions ... I recommend you delete the 1099-R then close out of the program and reboot the computer. Then log back in and re enter the 1099-R again and pay close attention to the follow up questions. The retirement should be taxable but no penalty applied so you don't need to answer any penalty forgiveness questions at all .
