Form 8915-E will remove the penalty only. The distribution is still taxable. Just now spread over the 3 years. Seems like you had it right. Program should show the 1/3 taxable amount in 2020, although you may need to adjust any refund to be carried over to satisfy the liability that is forthcoming in 2021 and 2022. Don't leave your clients hanging on the end of the limb like a little pinecone............fixing to fall hard.