Yes, it should be code 1 if you were under age 59½. I suggest contacting the plan to obtain a corrected Form 1099-R.
Otherwise, if you are using the CD/download version of TurboTax you can switch to forms mode, open the 1099-R form and then mark TurboTax's box A1 on the form to indicate that it should have had code 1.
If there was no tax withholding, you can also simply substitute a code 1 for the code 7 on the form. With no tax withholding, the details of the entered 1099-R form are not included in your e-filing, so the IRS will not be aware that you made the code substitution to obtain proper reporting.
