A Form 1099-R reporting a rollover from a 401(k) to a Roth IRA should have amounts in boxes 2a and 5 that sum to the amount in box 1. Under these circumstances I would not expect there to be any amount in box 5, so box 2a should show the same amount as box 1. If the Form 1099-R provided by the payer has a zero in box 2a, that's probably a problem.
The $500 is not being double-taxed. Your employer has excluded from the amount in box 1 of your W-2 the amount shown with code D in box 12 of your W-2.
