Thanks for your clarification on the NJ rule comparing this to a rollover. I don't see on the NJ1040 where to enter the rollover portion so I suppose I'll just override the amount and enter a note with an explanation.

How you are describing the Federal handling of the 1/3 is not at all how form 8915 is setup and not at all how ProSeries is handling it. On the 8915 line 9 breaks out 1/3 of the total distribution as taxable. Line 10 asks for the repayment amount. Line 11 subtracts 10 from 9 and is the 2020 taxable amount. Since lines 9 and 10 are equal on my return there is no tax due. Since the repayment was made in the same year no amended return will need to be filed. 

If they had not made the repayment in 2020 they would owe 1/3 of the tax. If they repaid 2/3 in 2021 they wouldn't owe tax for the 1/3 in 2021 and they could file an amended return for 2020 to get those 1/3 taxes refunded.