401k distribution is showing as taxable for Pennsylvania state tax, but PA doesn't tax 401k distributions

[dhillst]

Sadly - in my 2024 PA state return the 401k distribution a '7 - Normal distribution' was considered 'taxable'. There is no designation for the second checkmark for Box 7 on the 1099-R.  I have two 1099-R distributions from this institution. One was for rollover funds to a different institution, and a second for funds that were distributed to me and not put into another tax deferred account (I spent the money). This did not happen in my 2023 TurboTax return, but 2024 was slightly more complicated with rollover funds. When I did the same entry in 2023 there was no problem with the 1099-R from this institution. To make TurboTax believe that this distribution in 2024 is non-taxable in Pennsylvania, I have to check the 'IRA/SEP/SIMPLE box on TurboTax to state that the this was a distribution, though it actually came from my 401k plan. 

I did have federal withholding for those taxes.  I'm 69 years old.

[MaryK4 · Accepted solution]

In the Pennsylvania state section of TurboTax, you can indicate what type of retirement account it is so it is not taxable.  

[dhillst]

That worked - I changed the code in Pennsylvania to 'I'm eligible; plan's eligible (no PA tax) and the tax liability in PA stayed the same (minimal tax).  I did go back to update the Federal Tax questionnaire under Retirement Plans and Social Security to update the second 'checked' box - to remove the 'IRA/SEP/SIMPLE check I previously added.

Thx very much!