To treat it as a rollover to a traditional IRA, TurboTax only needs to know that it was not rolled over to any kind of Roth account.
Yes, the distribution is income, but rolling it over to a traditional IRA makes it nontaxable income. TurboTax's summary page shows both taxable and nontaxable income. To see that the amount rolled over is not being included in your taxable income, see that the amount rolled over is excluded from Form 1040 line 16b or Form 1040A line 12b. You should also see the word ROLLOVER next to this line.