When entering Partner Distributions should it be filed as a Transfer or an Expense?

Welcome to the Community, @csokoloff.

For this issue that you have, you can set up an owner's draw account. On the other hand, if you're paying them with a debit card,  record the repayment as an expense.

To explain the owner's draw account and for the step by step setup process, refer to this article: Set up and pay an owner's draw.

I recommend consulting your accountant for another option.

let me know if you have additional questions by leaving a comment on this thread. Have a great day ahead, take care.

Partner distribution means you are moving last years retained earnings to each partner's equity account

use a journal entry

debit retained earnings $$$$

credit partner 1 equity, $$$
credit partner 2 equity, $$$

etc