But either code G or 7 will come out the same way. When you enter a 7 you say how much you rolled over. The part you rolled over it's not taxable unless you put it in a ROTH IRA. You only pay tax on the amount that wasn't rolled over - the 20% unless you added it back in from you own money.
If you are looking at a summary screen or review screen those show the full amount as income and lump a lot of stuff together. You need to check the actual 1040 form and make sure it's right.
If you rolled it over it should say Rollover to the left of the taxable amount on 4b or 5b.
