dmertz
Level 15

Retirement tax questions

Code 2 means that you are not subject to an "additional" tax, a 10% early-distribution excise tax (penalty).  This is what TurboTax is telling you.  TurboTax is not telling you that the distribution is not subject to income tax.

 

Check Form 1040 line 4b to see that the Roth conversion is being included in taxable income.