OK, I think understand the reason for the marking of the Form 1099-R the way it was marked.
First, I think that you meant that you rolled the traditional account in the 401(k) over to a traditional IRA, which would have been reported on a Form 1099-R with code-G in box 7 and the IRA/SEP/SIMPLE box unmarked. A rollover from a Roth 401(k) account to any kind of traditional account is never permitted
Second, even though the Form 1099-R seems to report a rollover from a traditional IRA to a Roth 401(k) account, such a rollover is not permitted and, as such, there is no legitimate way to report such a rollover. It seems that Matrix Trust Company just made up their own reporting scheme out of thin air.
The only type of taxable rollover to a designated Roth account in a 401(k) that the tax code permits is an In-plan Roth Rollover (IRR). What should have happened is that the rollover be made from the traditional IRA to the traditional account in the 401(k), reported with code G in box 7 and the IRA/SEP/SIMPLE box marked, followed by an IRR reported with codes B and G in box 7 with the IRA/SEP/SIMPLE box unmarked.
