Because your software doesn't ask what the date of my distribution was, it incorrectly assumes it was an early one because I turned 59 1/2 during the tax year.
TurboTax bases the penalty determination on the code reported in box 7 of the Form 1099-R provided by the payer.
If the payer mistakenly reported this distribution with code J instead of code T or Q despite you already having reached age 59½ prior to the date of the distribution in 2016, TurboTax will ask you if the distribution was made after reaching age 59½. If you answer Yes, TurboTax will automatically prepare Form 5329 with an Other Reason exception to the early-distribution penalty.
If the Form 1099-R has code T or Q, TurboTax generally would not be calculating a penalty on the distribution. If TurboTax does seem to be calculating a penalty on a code T or Q Form 1099-R, delete and reenter the 1099-R.
Also, be sure to click the Continue button on the Your 1099-R Entries page and answer the questions that follow.
TurboTax bases the penalty determination on the code reported in box 7 of the Form 1099-R provided by the payer.
If the payer mistakenly reported this distribution with code J instead of code T or Q despite you already having reached age 59½ prior to the date of the distribution in 2016, TurboTax will ask you if the distribution was made after reaching age 59½. If you answer Yes, TurboTax will automatically prepare Form 5329 with an Other Reason exception to the early-distribution penalty.
If the Form 1099-R has code T or Q, TurboTax generally would not be calculating a penalty on the distribution. If TurboTax does seem to be calculating a penalty on a code T or Q Form 1099-R, delete and reenter the 1099-R.
Also, be sure to click the Continue button on the Your 1099-R Entries page and answer the questions that follow.