No, you are not missing something. I have confirmed this issue.
You have a workaround - On the screen "Iowa Retirement Income", you can enter the distribution with the code 7D (or other not eligible plan) in the line "Pensions and Annuities Not Reportable to Iowa".
You will note in the Learn More that this line is actually for something else, but entering your ineligible distribution here will work just fine.
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