The Vanguard rep had it backwards about box 2b or you misunderstood what you were told. Box 2b Taxable amount not determined is required to be marked on any Form 1099-R with code 7 in box 7 for a distribution from an IRA for exactly the reason that the Vanguard rep said, that determining the actual taxable amount is done on your tax return, not by Vanguard. The IRA/SEP/SIMPLE box must also be marked. The Vanguard system will automatically mark this.
All of your traditional IRA accounts are treated as a single IRA account for the purpose of determining the taxable amount of a Roth conversion. The calculation is done on Form 8606.
