When you initially entered the Form 1099-R in the Income Section (Federal Return), after you enter the 1099-R, you need to select the right category as to where the 1099-R was issued from, to get it to flow to your NYS return properly and be tax-exempt. This will be one of the subsequent questions that come up right after you enter your Form 1099-R.
When you select this (see below), it will flow properly to your NYS return as nontaxable.

Go back to your Form 1099-R in your Income section. Try to edit it. You may have to delete and reenter the Form 1099-R to get this question to pop back up.
Click here for information on deleting your Form 1099-R in TurboTax
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