After entering the Form 1099-R, click the Continue button on the Your 1099-R Entries. Answer Yes when asked if you opened a Roth IRA before 2013. That's all you need to do for this income to be treated as nontaxable income. The gross distribution amount will appear on Form 1040 line 15a or Form 1040A line 11a but the entire amount will be excluded from line 15b or 11b.
There is no need for any penalty exception because the code T already indicates to TurboTax that the distribution is exempt from penalty. No penalty for this distribution will appear on Form 1040 line 59.
