Form 1099 R provides distribution code 2 which means exception applies. You need to report this amount on your tax return(Form 1040) Line 16a and 0 on Line 16b. Hence, none of the amount will be taxable since it is a rollover into a qualified plan.
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.
Generally the Form 1099R should have reported taxable amount as 0 in case of trustee to trustee rollover and reported the distribution code for direct rollover. Have you tried contacting them to find out if this was an error on their part?