Yes, you can file the return after making the extra entry in box 16. Nothing has fundamentally changed by adding that entry except for clearing the error message.
The taxable amount of Form 1099-R is determined by the data entered in the 'Federal' part of the Form 1099-R. The 'state' section is not used for this purpose. Plus, the information that is transferred to the state returns is also based on the 'Federal' section plus the state taxes withheld. Box 16 does not transfer to the state return.
@rccurry
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