Where is it showing as income? After you entered the 1099R it asks what did you do with it. Did you say you moved or rolled it over to another account? Then enter the amount you rolled over.
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.
