I found your comment to an answer I gave a year ago indicating that your code H Form 1099-R has box 2b Taxable amount not determined marked. I forgot all about the fact that TurboTax will treat as taxable a code H Form 1099-R with that box marked and a blank box 2a. That's the cause of the symptom you are seeing. I'm glad to see that you stuck with it.
You have an improperly prepared Form 1099-R from the payer. A code H Form 1099-R is required to have a zero in box 2a and box 2b Taxable amount not determined NOT marked. It's odd that TurboTax treats a code H Form 1099-R with this error as taxable, but it seems to be such a rare occurrence that the payer makes this error that it hasn't raised the attention of the TurboTax Product Quality folks. I think it's unlikely that TurboTax's behavior with regard to this will change before the filing deadline since the problem has been in TurboTax for years.
As a workaround, simply enter a zero in box 2a. Since there is no tax withholding in box 4, the details of what you enter on TurboTax's 1099-R form are not included in the e-filing, so the fact that you entered a zero in box 2a will not be apparent to the IRS. What *will* be apparent to the IRS is that your tax return shows the distribution correctly as nontaxable.
