Mystery 1099-R Form - Not sure how/what to report?

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Background:

I changed jobs in early 2017, and within a 60 day window I opted to roll my company 401(k) over to a traditional IRA with Vanguard. It was all in a Vanguard index fund already, but the lower-cost Admiral shares were not available in the plan, so rolling them over enabled me to get the lower MER (why I bothered to do it). It was all pre-tax money, rolled into a Qualified Retirement Plan, and therefore not taxable. Easy.

Here's where it gets odd. I wasn't really expecting to receive a 1099-R at all, so imagine my surprise when they sent me 2 of them! The first one described the rollover transaction for the full amount, OK, I understand that one. The second indicated that I had taken a distribution of $13.75 (matching the amount of a check they had sent me earlier in the year) which was fully taxable. The best I can figure, this represents an increase in value while the rollover transaction was taking place, since these transactions are not typically instantaneous. Is this plausible/common?

This tiny amount of money is causing me disproportionate issues while filing my taxes. Not only is this amount directly taxable, but because it is categorized as a distribution from a retirement plan, my tax software (TaxAct) is saying that I owe a 10% penalty on this amount for withdrawing early! If that wasn't enough, the forms I need to document all of this are not included in the basic package of TaxAct, so it wants to charge me another $30 to upgrade the software!

If this amount is actually what I think it is, shouldn't it be either capital gains, or else included in the other rollover transaction and therefore not taxable? It wasn't a distribution I elected to take, after all, and I am not sure how I should report it. Even though we're talking about an amount that is basically peanuts here, I'd rather do the right thing and not have the IRS think I'm trying to pull a fast one even though I feel this amount is incorrectly classified.

Does anyone have any suggestions for how to approach this problem, or have experience dealing with something similar? Should I just pay to upgrade my software and be done with this headache?

[terran]

Sounds like you did indeed take a distribution. You could have rolled that 13.75 over into your IRA with 60 days and it would be fine, but since it's such a small amount I just wouldn't worry about it since at most you'll pay like $8 between state + federal + penalty, but it is a bummer it's forcing you into a higher level of Taxact. You could try filing yourself or look into other software.

[caracarn]

I've had things like this in the past, usually when the institution I was moving my 401(k) from to an IRA had no direct transfer route.  They send you a check and you have 60 days to place in the IRA.  I just got the same thing this year when my employer that I have been gone from for 2 years finally cashed out the remaining $83.67.  It shows taxable, but because I desposited into my IRA I did not claim as such.  I am using TurboTax this year, not TaxAct (I have importing the brokerage transactions from a CSV and fiddling with that versus the direct import that TurboTax does, so it's worth an extra $40 to me to eliminate that headache), but there is cetainly a way to change that to non-taxable (usually a check box).  If you get audited all you need to do it show that you desposited.  Also unlikely they will even notice for the tax on $13.75.  In my case I moved over $150K so they wanted their $15K penalty and they audited me.  I simply sent the IRS the deposits into Vanguard and two weeks later got my letter that said I owed $0. 

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Thanks, both of you. Looking back, I think I'm realizing that I screwed up and should have asked more questions to clarify what was happening when I first got that check. I would guess at this point it would be outside the 60-day window and I can't correct it.

Live and learn! This is the first time I've changed jobs so haven't encountered this before. Now I'll be prepared if it happens again.