I am having this same problem. I am glad that I am now seeing this thread and learning that it is a global issue. I live in Mississippi and receive a public safety pension (and have for the last 14 years) from the Louisiana State Employees' Retirement System. Since during that time I was under 59 1/2 my distribution code on my 1099-R was 2 (Early Distribution - WITH EXCEPTION). For the last 10 or so years Turbo Tax has recognized the 2 code as being a qualified distribution and the pension was not considered taxable income in Mississippi. Apparently, they can now not figure out the difference between code 1 (Early Distribution) and code 2 (Early Distribution - WITH EXCEPTION).
As stated earlier, the fix appears to be to dump Turbo Tax and go with H&R Block since Turbo Tax apparently can't figure this out. We plan to request a refund and move on. I don't need this stress.
