It should show it as income, but that income should be nontaxable.
Certain summary screens within the program show all items entered whether they are taxable or not and in this instance- so you may see it displayed here as "income", though it is not taxable.
Rollovers are also reportable on the tax return. On Form 1040 you should see the amount reported on Line 5a, but absent from Line 5b. If the transfer was a direct transfer with a code G in Box 7 on your 1099-R this will happen automatically.
If the rollover was indirect, be sure that you indicate that a rollover was made in the follow-up questions that TurboTax will ask after you complete the entry of all of your 1099-R forms.
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