If you meet the age requirement set by your plan to withdraw, you will choose I'm eligible; plan eligible (no PA tax). This option will take away the question regarding the cost basis. If you did not meet the age requirement set in your plan, you will choose early distribution from a ret. plan. At this point, you will need to enter the cost basis for your plan. Pennsylvania tax laws exempt most retirement and pension income from state tax because the contributions are not excluded from your taxable income in the year you make them. Therefore, the basis needs to be included. If you took your distributions after you met the age conditions of your plan you are also exempt from being taxed on the withdrawal that exceeded the cost basis.
For more information on how Pennsylvania taxes retirement plans, see the link below:
Is my 1099-R taxable?
@DN707tax
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