I tested with age 33 because I made the mistake of assuming that TurboTax would not behave this way unless the individual was under age 59½. I just did some checking and this bug has been present at least as far back as 2013 TurboTax, so don't expect it to get fixed.
I'm surprised that I've haven't seen mention of it before. It's appears to be present only in step-by-step mode of the CD/download version of TurboTax, not in the online version. As you said, it also appears that you can simply delete the Form 5329 and the extraneous entry will disappear unless you revisit the Form 1099-R in step-by-step mode.
