I've reported the bug. The turn-around time on this sort of bug fix is somewhat unpredictable. It has to do with how Product Quality prioritizes the bug relative to others.
With a code 81 or P1 Form 1099-R with the IRA/SEP/SIMPLE box marked, TurboTax is presently ignoring box 2a amount in determining the amount subject to penalty and is using the box 1 amount instead. TurboTax *is* using the box 2a amount when determining the taxable amount to be included on Form 1040 line 15b or Form 1040A line 11b.
My only suggestions for a workaround are to use the CD/download version of TurboTax and override Form 5329 Early Distributions Included in Gross Income Smart Worksheet line A to show just the $69 from the code 1 Form 1099-R (overriding requires printing and mailing your tax return) or omitting the code 81 Form 1099-R, printing your tax return, modifying Form 1040 line 15a or Form 1040A line 11a to add $5,500 (for a total of $5,569, assuming no other IRA distributions), then mailing your modified tax return with a manually prepared explanation statement.
