CAREFUL on this. Years ago, back in 2019, I had taken money from TSP (traditional not ROTH), box 7 Distribution code 2 (early distribution exemption applies) under age 59 1/2, BUT separated from USPS with age and service requirements 55 years old with 30 years of service (including military). Called PA dept of Revenue, who's representative on phone initially and incorrectly stated the distribution was taxable. I argued the point, she checked with supervisors... AND IT IS NOT TAXABLE. It is a PA eligible plan, and though I was only AGE 56 at time of disbursement, I had satisfied the age and service requirements of the plan. Once again this under certain conditions it is not taxable for PA.
• If any Form 1099-R with distribution Code 2 in
Box 7 is submitted with the return, determine if
the distribution is from an eligible employersponsored retirement or pension plan for PA tax
purposes. Eligible plans must:
° Be in writing;
° Include provisions for separation of service,
old age or infirmity, and long-continued
service;
° Provide for payments at regularly recurring
intervals after separation form service until
death or an option for a lump sum payment;
and
° Do not permit the distribution of program
benefits to any employee until termination of
employment except for incidental disability
benefits or the return of the employee’s previously taxed contributions and income or
gains if the employee is required to contribute to the pension plan.
If these conditions are met, the distribution is
not taxable for PA personal income tax purposes.
