As long as you rolled ALL of it into an IRA within 60days, then you indicate that on the pages that follow that 1099-R form and it won't be taxed.
Your bigger issue is that once rolled into an IRA, you can no longer claim "Bailey Settlement" for any $$ you take out of that account...you have lost the ability to claim that the $$ are qualified for exemption from NC taxes.
"qualifying tax-exempt Bailey benefits rolled over into another retirement plan lose their character and would not be exempt upon distribution from the other plan unless that plan is a qualifying Bailey retirement account in which the employee was vested as of August 12, 1989. (Rollovers to IRAs will always result in a loss of tax-exempt status since IRAs do not qualify under the Bailey settlement.)"
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*