State tax filing
It depends. With code D and code 7 entered in the federal return when entering the Form 1099-R, when you begin to review your Pennsylvania (PA) return you are asked questions. TurboTax will ask you to verify this income because of the several various instances for PA to determine whether a 1099-R is taxable or nontaxable.
First you are asked 'What kind of retirement income do you have from PA?' Here you must select from the drop down 'Non-qualified deferred comp plan'. On the next screen you will see the PA taxable income for this distribution. See the image below.
