The penalty exception is on Form 5329 - code 12 or L in ProSeries -other.

The code "L" in Pro Series Basic is "Loan treated as deemed distribution", is that what we're supposed to label it?  It doesn't have a code 12.  

Also, do you know if we split the tax withheld over 3 years as well?  

on Form 5329 in the Smart Worksheet below Line 1   - use option L "Other"  

I don't have anything I can point to for this answer but I would think all of the federal withholding is reported in the first year. 

Ok, I see what you're saying now, thank you so much for your help.  And that's what I was thinking about the withholding as well because the IRS would have record of the withholding all in 2020.

@Jtax LLC You do not split tax withheld over 3 years. Also not official, but I have heard the IRS is  going to update the 5329 to remove corona virus from "other"

To clarify for others: "The code "L" in Pro Series Basic is "Loan treated as deemed distribution","

I think you were looking at the 1099-R codes?