TurboTax only asks the question if you are entering a code 7 Form 1099-R and you were not already age 59½ or over at the beginning of the year. [In most cases, but apparently not for military pensions; see follow-up replies below regarding military pensions instead of what follows in this reply] if not subject to an early-distribution penalty, distributions received before age 59½ should have code 2 on the Form 1099-R, not code 7. Only the distributions received after age 59½ should have code 7. TurboTax automatically treats code 2 as not subject to penalty. When entering the code 7 Form 1099-R, the question asking if any was receive before age 59½ should always be able to be answered No if the forms were prepared properly by the payer.
Online and the CD/download versions of TurboTax appear to be handling these differently. Online behaves as you described while the CD/download versions appear to never treat code 7 as subject to penalty [unless TurboTax's box A1 on its 1099-R form is marked in Forms mode].
It seems a bit unusual that you would already have a 2020 Form 1099-R since they usually aren't available until later in January. Do you actually have the form in hand or downloaded?
