Was it a trustee-to-trustee transfer, or did the taxpayer receive a check and then deposit the funds in a new account within 60 days?

On the 1099-R worksheet, scroll about 2/3 of the way down and fill in the Rollover section.

Thanks BobKamman! It was a trustee-trustee transfer! If it was a check and deposited within 60 days, doesn’t it still qualify for exclusion! 

Yes, if she got a check and put it u=into anther retirement account she would qualify, I generally ask to see the statement for the account that it went into, sometimes people are ignorant and put inti the wrong type of account or they miss the 60 day window.

Good point! Thanks, Just-Lisa-Now-

Trustees generally don't send checks to other trustees.  There's a wire transfer system for that.  Was that check payable to her and she endorsed it to the new trustee?  (I'm giving 50-1 odds that you haven't seen a copy of the check.)  

Yesterday I was helping a client with the federal TSP and a state of Colorado rollover gone wrong. Both will only send checks even though wires were preferred. And the federal gov't mailed checks to France, instead of the US Trustee, which never arrived.

The issuer of the 1099-R issues it for money Out. They don't necessarily know nor are responsible for what happened next. There is no error in the 1099-R.

The preparer uses the code provided in the program to indicate the situation which occurred, and you know by doing due diligence.