These Forms 1099-R correctly correspond to the fact that the rollover from the 401(k) was to a traditional IRA and that there was a subsequent Roth conversion from the traditional IRA. Both are transactions are reportable and each will add to the total reportable income but only the Roth conversion will add to taxable income.
When entering the code G From 1099-R, answer No when asked if the rollover was to any kind of Roth account. The result will be that the gross amount will appear on Form 1040 line 5a but none of it will appear as taxable on line 5b. The word ROLLOVER will appear next to the line.
When entering the code 2 Form 1099-R, indicate that you moved the money to another retirement account, Depending on the version of TurboTax, you can either indicate that you converted the entire amount to Roth or, if that option is not present, indicate that you did a combination of rolling over, converting or cashing out and indicate in the amount-converted box the amount converted (the amount in box 1). TurboTax will include on line 4b the taxable amount converted (the entire amount unless you have basis in nondeductible traditional IRA contributions.
The TurboTax summary will show the total of these two transactions, perhaps separately identifying nontaxable and taxable income. Only the Roth conversion will appear in taxable income.
