If box 7 of the 1099R is coded a 1 or 2 (early retirement distributions), it may be taxable on a PA income tax return. Codes 4(death) and 7(normal distributions) are not subject to PA income tax.
If an early distribution, that portion of the distribution that exceeds your basis in the plan is taxable. Your basis is the sum of all contributions you made into the plan through the years less the sum of all previous distributions from the plan.
