The $0 on line 16b is correct, assuming that you rolled over more than $1.7k.
The Form 1099-R shows that $14k of the $15,5k distributed consisted of your original contributions to the Roth 401(k). The law states that a rollover consists first of the amount that would otherwise be taxable. In this case, that means that the otherwise taxable $1.7k was rolled over to the Roth IRA and your $350 of tax withholding and any other amount not rolled over came from the nontaxable portion of the distribution. Therefore, the taxable amount on From 1040 line 16b is $0 and, because nothing is taxable, there is no early-distribution penalty.
