I agree it's a conversion (Traditional to Roth), but the following language comes from IRS Instructions for 2023 1099-R (page 5):

For a direct rollover of a distribution from a section 401(k)
plan, a section 403(b) plan, or a governmental section 457(b)
plan to a designated Roth account in the same plan, enter
the amount rolled over in box 1, the taxable amount in
box 2a, and any basis recovery amount in box 5. Use Code
G in box 7.

While the nature of the funds changed and the transaction is fully taxable, it is reported on the 1099 as a "rollover" as described above.  Code G, not Code 7 in box 7.

The question I had was relative to the calculation of the Roth IRA contribution limit based on AGI minus Roth conversions (and other adds/subtracts that don't apply in this case).  Since this conversion was in-plan, it appears it does not reduce AGI.  If the conversion can't be subtracted from AGI, they are over the limit for making a Roth contribution.  At first, I thought I must have entered it in the software incorrectly, but sadly looks like the software is accurate and they will not be able to make Roth contributions for 2022.