I missed the fact that the code 2 was on the Form 1099-R for the $1,600 withheld for taxes rather than the one for the $6,400 that was converted.
I agree with Opus 17. Because the code-2 Form 1099-R includes tax withholding, the details of the form will be included with your filing. If you enter code 1 instead of code 2 without doing a substitute form, you'll be appropriately paying the penalty. The IRS might flag the difference and refund the $160.
At age 41, I would be more concerned about the lost tax-free earning potential of the $1,600 than the $160 penalty. Since they made a mistake in withholding taxes, you might consider trying to complete a late rollover under IRS Rev. Proc. 2020-46 by self-certifying that this would qualify for a waiver of the 60-day rollover deadline due to financial-institution error. It's up the the financial institution to accept or reject the self-certification: https://www.irs.gov/retirement-plans/accepting-late-rollover-contributions
