Early retirement income on disability

[petepuma]

2019 I was forced to retire early at age 58 due to physical problems. I qualified for social security disability rather quickly. I was going to take my CalPERS retirement under disability but the state rep talked me out of it. The tax program seems to be penalizing me for early withdrawal even though I am legally recognized by the feds as being disabled. I was told that there should be no penalty for this but the program dropped my refund by half after imputing Calpers 1099. How do I fix this?

[DoninGA]

What is the code in box 7 of the Form 1099-R?

[petepuma]

Code 2 is in box 7 which means for calpers I retired early. As I stated they talked me out of disability retirement option as it would have drastically reduced my monthly income. I am on social security disability as I am and I was told by Horace Mann who holds one of my other retirement instruments that there should be no penalty for early withdrawal due to disability. I would imagine my proof of disability to the IRS would be my receiving SSDI. My question is was I given correct information and if so how do I get the program to fix this.

[ColeenD3]

Code 2 should eliminate any penalty. Was it a penalty that is producing the tax or is it just insufficient withholding on the taxable pension? If your income is high enough, a portion of your social security could also be taxable.

Look on Line 6 of Schedule 2 for a penalty amount.