Choose "Another reason" from the list of exceptions to the early withdrawal penalty. As you go through the 1099-R interview there will be a screen that lists the exceptions.
(The qualifed birth or adoption exception to the early withdrawal penalty is a new provision of the tax law and is not included in the "Learn more" tab for "Another reason").
Birth and Adoption Exception – The tax law provides for several exceptions to the early-withdrawal penalty, and Congress has added another one as part of the Appropriations Act of 2020 (SECURE Act). The new exception provides for penalty-free plan withdrawals for births or adoptions, for distributions taken from IRAs, qualified employer plans (such as 401(k)s) and government retirement plans after Dec. 31, 2019. However, the maximum aggregate amount of a qualified birth or adoption distribution by any individual with respect to any birth or adoption is $5,000, applied individually (so each spouse may separately receive $5,000 of qualified birth or adoption distributions).
