No an IRA contribution does not offset the tax on the 1099-R.
Essentially it says that you can "replace" the money on the code M and treat it as a non-taxable rollover. If you do that you must tell the IRA trustee that this is a code M rollover and NOT a IRA contribution.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
