With option 1 you would have to file an amended 2020 tax return after receiving the code PJ 2021 Form 1099-R. It does not go on your 2021 tax return. If you enter it into 2021 TurboTax, 2021 TurboTax will just tell you that you needed to report it on your 2020 tax return.
Regarding option 2, just enter the 2021 Form 1099-R as if you have already received it. Do not enter it as a substitute Form 1099-R.
Regarding the required code J and being over age 59½, I already addressed that:
If you were over age 59½ at the time of this distribution, you'll need to claim an Other reason exception on line 2 of your 2020 Form 5329 to the 10% early-distribution penalty on the $677.81, otherwise you owe a $68 penalty on 2020 Form 5329.
