Code 1 indicates a regular distribution from your traditional IRA, not a return of contribution.
The original contribution needed to be reported on your 2016 tax return with a 2016 Form 8606. The result should have been $5,500 on line 14 of the Form 8606. If you did not do this, you'll need to file submit a properly prepared 2016 Form 8606. Since you filed a 2016 tax return, the instructions for Form 8606 indicate to submit the Form 8606 with Form 1040X. The Form 1040X will show the IRS that you are not simply changing a deductible traditional IRA contribution to a nondeductible contribution.
https://www.irs.gov/pub/irs-prior/f8606--2016.pdf
With regard to your 2017 tax return, enter the Form 1099-R, in the immediate follow-up indicate that you "Did something else with the money," i.e., you did not roll it over to another retirement account. On the Your 1099-R Entries page, click the Continue button and in the additional follow-up answer Yes, you made nondeductible traditional IRA contributions an enter $5,500 as the amount that you contributed for years prior to 2017. Enter $0 as your December 31, 2017 balance in traditional IRAs. TurboTax will prepare 2017 Form 8606 to determine that the $5,500 is a nontaxable distribution of your basis in traditional IRA contributions and therefore also not subject to penalty.
Had you requested a return of contribution in 2017 instead of a regular distribution, the distribution would have negated the original contribution, making it as if the original contribution had never happened. Since you obtained a regular distribution instead, you have a separate contribution and distribution, both of which must be reported as I described above.
