"because it is treating a non-qualified annuity as a non-qualified plan. " - I assume that this because you clicked on the "From a Non-Qualified Plan" button in the 1099-R interview.
On your 1099-R, is box 2a empty or is "Taxable amount not determined" not checked?
If neither are checked, then do the following.
Do not enter anything for boxes 2a or 2b.
Work through the 1099-R interview, and when you are asked if this Distribution was from a Qualified Plan, answer "from an non-qualified plan".
After that, when you complete the 1099-R interview, then the non-qualified annuity distribution should not show up on line 5b on the 1040. (i.e., the blank box 2a should carry to line 5b on the 1040).
OR
Click on the "qualified plan" button. When you are asked if you want to use the Simplified Method or the General Rule, answer General Rule. When it asks you how much of the distribution is taxable (because TurboTax expects you to do this outside of TurboTax), answer 0 (zero). Again, the distribution should not be found in line 5b on the 1040.
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