If you are receiving a 1099-R and there is an amount in box 2a then a portion of your retirement IS taxable. You'll need to enter the 1099-R into your federal tax return.
If you live in a state where your military retirement benefits are not taxable then you should make sure that they are not included on your state tax return. If the state sends you a letter asking about the retirement benefits and where they are on your state return then you send them a copy of your award letter.
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