Get your taxes done using TurboTax

I've examined your diagnostic file, and I believe that Monika's solution will enable you to e-file your return with no issues. I realize that you are reluctant to make changes to your W-2 entries, but because it's considered a distribution from a non-qualifying plan,  the program must associate a  State and a dollar amount with the payment in order for the income to be properly reported on line 8 of the 1040. Yours is a somewhat unusual situation.

1. Ener the entire distribution in Box 16 of the W-2, along with  Pennsylvania  and the state identification number for the payer. You would use the correct state ID if you have it, but often you can use the Federal EIN if you don't.  
2. Enter the correct amount in Box 11 for Nonqualified plans.
3. Continue through the program and on the screen Did you take money out of your nonqualified pension plan? Enter Pennsylvania and the full amount of the payment. That finishes up the federal side.
4. Go to your state return, and choose to Edit.
5. On the screen You've Finished Your Pennsylvania Return, choose Update on Income and Adjustments.
6. On the Compensation Summary, Choose Edit.
7. On Verify this Income, Check that the Entire amount of this income is not taxable in PA. 
8. You will see the message This compensation will not be included in your Pennsylvania taxable income.
9. Continue through the prompts and you should have no errors. 

I followed the above process and it worked for me. Of course, it is your responsibility to determine whether or not any of this income is taxable in Pennsylvania, but it appears that you've already established that. Please see the screenshots below for where you will make your entries

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