Why is the distribution code on my 1099-R a 1 for early distribution, when my banker said because I was over 59 1/2 years old, there would be no penalty?

[DoninGA]

If you were age 59 1/2 or older when the funds were distributed then the code in box 7 is incorrect.  You will need to get a corrected Form 1099-R from the payer.

[dmertz]

You can also claim on line 2 of Form 5329 a code 12 exception to the penalty, but I suspect that this can't be done in the free version of TurboTax without upgrading to a paid version.