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When querying the tezos rpc, the baker address is shown under the delegated_contracts, this causes an issue when using tezos-reward-distributor to payout the rewards since TRD looks at the rpc and creates a payment transaction to pay the baker.

What seems to be the configuration issue that causes the baker to be listed as a delegated_contract? I have pretty much followed the default baker node setup, the only change was to use a remote-signer

Ref : https://testnet-tezos.giganode.io/chains/main/blocks/head/context/delegates/tz1PgkWZdr5Vcbb3CbhubheYuEGpxJtKDMhT

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The baker address showing under delegated_contracts has been introduced in Babylon protocol upgrade. This behavior will be restored to the formed state, which doesn't include the baker address, in an up-coming proposal.

In the meantime, I think you can setup a rule in tezos-reward-distributor to keep the baker's payment in the baking address: see the rules_map parameter with TOB value.

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