The 1099R worksheet has a Box 19...actually its got boxes 19-1 and 19-2 in 2 totally different places (19-2 is much further down the page), do either of those boxes get the figure to go where its supposed to?

Or is there a separate peg to put it on in the MD software?

No, adding the income here does not work.  There is a place in MD software but it must be put in the federal worksheet first.

After entering the date in the 1099-R, you can put the State distribution in box 19, but I also had to enter it on the page over that says "Other Information".  You will see a box that says "Pick up Contributions from 1099-R (502 filers),  enter the state distribution amount.   Once I put it there, it was taxed appropriately