For free kicks that go out of bounds untouched by R, our association has applied the ruling as if R chooses the out of bounds spot, we've tacked on 5 yards.....(5 yards from the succeeding spot) Yet in the latest issue of Referee Magazine ("Free But Not Easy, November 2018) a similar play is cited, (Play 4) but the 5 yard tack on is not mentioned. So I'm wondering if that is a typo or have we been enforcing this penalty option incorrectly?

RefMag has some very good articles and officiating tips. Their rules interpretations and quiz answers are notorious for containing errors. In fact, I don’t remember receiving an issue that didn’t contain a correction to a previous ruling.

Your association is applying the rule correctly.