You report the 1099-R from the withdrawal just as it is on your form.
There is no special treatment for using the withdrawal for a home addition. A home addition is not reportable or deductible.
Repairs, maintenance, and improvements to your personal residence property are not deductible from current income. If you make major improvements which increase your home’s market value or extend its useful life, you can add the cost of the improvements to the cost basis of your home, and you get the benefit when you sell.
You might find it helpful to read IRS Pub. 530, Tax Information for Homeowners
http://www.irs.gov/pub/irs-pdf/p530.pdf
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