May I assume that the W-2 had zero for Wages in boxes 1, 3, and 5? If so, you cannot e-file this return anyway.
The thing about HSA contributions is that they are not subject to federal income taxes, Social Security taxes, nor Medicare taxes. Thus, when you receive a W-2, the HSA contributions have been removed from each of the boxes 1, 3, and 5 before the W-2 is printed.
However, I suspect that you don't have any Wages in any box on your W-2.
So I suggest you do this:
1. Enter the 1099-R as normal, the distribution should be taxable
2. Go to the HSA interview and navigate to the screen with the title, "Let's enter [name]'s HSA contributions".
3. Enter the code W amount from the W-2 into the second line as a "personal" contribution.
You see, personal contributions are subject to Social Security tax and Medicare tax, but since since you don't have any Social Security Wages or Medicare Wages to reduce, the personal contribution reduces only the federal income, which is what you want.
This will result in the HSA contribution being removed from income in order to make Adjusted Gross Income, thus reducing your tax.
This leaves only one problem: you won't be filing your W-2 as part of the return. The IRS may notice this someday, so you should write down what you did and why (i.e., you can't e-file a W-2 with zero Wages so you had to do a workaround).
In the past, others have suggested putting $1 in the Box 1 amount on the W-2, but I feel that that is not an elegant solution, because it has you reporting a different amount than what was on the W-2. It also changes your taxable income (increases it by $1). I would prefer to have your numbers exactly right and be prepared to explain why you did what you did in the unlikely case anyone notices.
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