Code U indicates a dividend distribution from ESOP shares. Such a distribution is NOT eligible for rollover. Depositing these funds into an IRA constitutes an ordinary contribution to the IRA and must be entered as such under Deductions & Credits. If the result is an excess contribution, you'll need to resolve the excess, typically be requesting an explicit return of contribution. Assuming that the IRA custodian coded the deposit as a rollover, requesting a return of contribution will require convincing the IRA custodian that this was a failed rollover and was therefore an ordinary contribution that can be returned.
