Yes, this refers to the amount of state tax withheld in box 14 of Form 1099-R. If that is not the form you are working on, reply back with more details of what you are doing,
You don't need to change the amount in box 14, it should be that same as what is on your copy of the 1099-R, rounded to the nearest dollar. The problem is that box 16 should be the same as the amount in box 1, or 2a.
A lot of issuers of Form 1099-R leave box 16 blank, but it's supposed to be the amount of your distribution that's taxable. If you have an amount in box 2a, enter that same amount in box 16. If box 2a is zero or blank, use box 1 instead.
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