dmertz
Level 15

Retirement tax questions

There is nothing wrong with TurboTax with respect to selecting code P for the box-7 selection.   If in the follow-up to selecting code P you tell TurboTax that it the Form 1099-R is a 2021 Form 1099-R, which you said that you did, TurboTax will treat code P as meaning taxable in 2020.  The $13 of gains will appear on Form 5329 Part I resulting in a $1 early-distribution penalty, but nothing about the entry of this Form 1099-R will produce an entry on Form 5329 Part IV.  If you delete the this 1099-R from TurboTax, I'm confident that it will not cause any change to the reporting on Form 5329 Part IV.  Whatever is causing 2020 TurboTax to produce an excess-contribution penalty on Form 5329 Part IV is coming from some other entry you have made in TurboTax.