As additional input, I reached out to an attorney who is also a retiree from the same pension plan, and who is familiar with the plan. He noted that although the W-2 is non-qualified it only is non-qualified for Federal purposes as the Plan did not satisfy the salary hierarchy discrimination test; but it is qualified for PA purposes as it meets the qualification tests. Therefore, it is eligible (no tax) in PA.
Hopefully this situation can be addressed by TurboTax (since 2023 is the first year where this issue has surfaced).
