as far as the tax laws are stated, up to $10,000 for lifetime can be used to buy FIRST principal residence. it's subject to regular income taxes but not the 10% penalty. if you desire to enter something contrary to TT programming you'll have to do it manually and thus will not be able to efile. also TT accuracy guarantee is invalid if you override. the 10,000 only is for IRA's and not for other pensions.
if you can cite a code section saying the distribution is non taxable, please cite it.