Best to consult with a tax pro here -- but I don't think you include the penalty in this process:
Straight from the horse's mouth, so to speak:
Retirement Plans FAQs regarding Required Minimum Distributions
The last page of the PDF instructions for the form shows how to fill in Form 5329 if requesting a waiver from the penalty under the "Waiver of tax" heading. This makes it sound like you don't include the penalty amount, and if the IRS isn't satisfied with the letter of explanation they may come back and "request" payment of the penalty.
[Disclaimer -- I am not a CPA, tax lawyer or a tax professional, blah blah blah.... ]