I have a 1099R with code 2 and it is carrying over to PA as no distribution. Shouldnt there be a PA tax on early withdrawal?

[Anita01 · Accepted solution]

A code of 2 means it's an early distribution but an exception applies to the 10% early distribution penalty.

Did you make any after-tax contributions to the plan?  PA won't tax any distributions until your cost is recovered.

[re2boys]

Code 2 is an early retirement plan distribution that is taxable to PA the the extent it exceeds your cost basis in the plan.

Your basis is the sum of all contributions in the plan over the years less any previous distributions taken from the plan.  The program will prompt you for your basis.