Federal taxes taken out of a rollover

My husband had a rollover retirement account that he forgot about.  Merrill Lynch closed the account and took out $10K+ of federal taxes and then sent us the remaining balance.  When we received the check, we sent it back to Merrill Lynch and had them roll it over.  Our 1099-R says 7 in box 7 that it was a regular distribution.  But we did rollover the remaining funds.  Do I change box 7 in Turbo Tax to G - direct rollover?  That seems to work but will it trigger an audit since it doesn't match the 1099-R?  Is there another way that I should be reporting this?  Thank you!