During the PA interview, you are asked what type of distribution is represented by each 1099R.  Your answer to this question determines if the distribution may be taxable by PA.

If box 7 of a 1099R is coded "7"  it is a normal distribution. Select "I qualify, plan qualify" to mark this distribution as tax free.  Ignoring this question will default to the income being taxable.

If the code is "7D"  It is taxable same as federal.

For more detail, see:   https://revenue-pa.custhelp.com/app/answers/detail/a_id/1470/~/how-do-i-know-if-the-amount-on-my-109...