From my only IRA A/C I withdrew in 2022 & received a Form 1099-R. The distrib'n code is "1" (i.e. early distr'n), but I became 60 3/26/2022. Schwab doesn't change codes.

The 5329 will show the exception that will nullify the 10% penalty.

Do this.

Enter the 1099-R. Enter the distributions code of '1' if that's what it is.

After you have finished the 1099-R entry, TurboTax will finally get around to asking about the disaster distributions and then about nondeductible contributions. Say NO (if true), then Continue. Then TurboTax will say, "Lets see if we can reduce your early withdrawal penalty" I just want to prepare you that you have to go a long way to get to this screen.

Hit Continue. Soon now you will come to "Did you use your IRA to pay for any of these expenses?" Look at the very bottom: "Another reason". Open the Learn More. The first item listed is "You were older than 59 1/2 when you took out the money."

Enter the amount of the distribution. on Form 5329, the penalty will be waived. 

It seems that Schwab does not have your correct birthdate, so you might want to correct that with them so that any future distributions from this account will be coded correctly, avoiding the need for you to claim the exception as described by BillM223.

Now that I have more room I'll add this, giving everyone more information. I actually received two 1099R's from Schwab. One had the correct Code (i.e. normal distribution), while the other had the Code for early distribution. Note: It might be a coincidence, but the 3 withdrawals totaling the wrong code were before my birthday.  The others were afterwards. In 2022 I had to make 8 small withdrawals. I think they have the correct birthday.

Thanks for this and the detail of step by step, Bill.

Thanks, dmertz. The first item I thought about was my birth date.

Since you were over age 59½ at all times in 2022, no 2022 Form 1099-R should have code 1.  Perhaps Schwab  thinks your birthday is in September, not March, but they have the correct year.