M is not in the drop down and it does not affect the taxability, or the penalty. 

FYI - It means they had a 401(k) or other plan loan and got laid off or fired. The loan was due the date they were terminated and if they didn't have the money, they were toast.  Depending on the plan, they do have up to 90 days to pay off the loan, so talk with the client. If they paid off all or some, that could impact the taxable portion, but generally they don't. Be sure they have documentation.