Solved
It looks like the options in the 1099-R, box 7 still refer to the 2016 tax options, not the updated 2017 options at https://www.irs.gov/pub/irs-pdf/f1099r.pdf.
2016 TurboTax's drop-down text assumes that you are entering a 2016 Form 1099-R. If you have received a code P (or code R) 2017 Form 1099-R that you must enter into 2016 TurboTax, select code P (or code R) and later in the follow-up TurboTax will ask you if it's actually a 2017 Form 1099-R.
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