I didn't anticipate that the payer had prepared the Form 1099-R incorrectly by using code G. This sounds like the sort of mistake a bank would make, reporting an HSA Funding distribution as if it was a direct rollover, which it is not. It's because of things like this that I insist on not calling an HFD a rollover. This sort of error usually results from a typically inadequately trained bank representative who marks the wrong box on the distribution form.
Ideally one would get the bank to correct the Form 1099-R to have code 1 or 7 depending on the age of the individual. If the bank refuses to correct the form, I think it would be appropriate to submit a substitute Form 1099-R with code 1 or code 7 in place of the code G, but doing so will prevent e-filing. With code 1 or code 7 and the IRA/SEP/SIMPLE box marked, TurboTax will ask if the distribution was transferred to an HSA and will prepare Form 8889 appropriately once the HSA section of TurboTax is visited to establish eligibility to have made the contribution. No workaround needed.
(Many banks use distribution forms provided by Ascensus which have boxes to mark to indicate the type of distribution and by marking the wrong box the back office blindly prepares the Form 1099-R based on the box that was marked. When dealing with banks there are occasions where I've had to refuse to sign a distribution form until the rep acquiesced to preparing the form correctly.)
