state of PA does not tax Roth distributions, yet the TurboTax software is taxing it like income. HOw do i fix this??

[charlene-noll63]

the software is not correct!

[MindyB]

Distributions from your IRA or your employer's sponsored retirement plan are taxable to the extent the distribution exceeds your basis if you are under 59.5, and if you are over 59.5, they are not taxable if the IRA is considered an “eligible retirement plan.” See: PA Personal Income Tax Guide: Gross Compensation.  

In order to ensure that you are not being taxed on withdrawal of previously taxed contributions, navigate to: 

1. State Taxes > Your State Returns > Pennsylvania > Continue
2. Continue through the interview until you are asked what kind of retirement income you have from Pennsylvania, choose the appropriate category based on your age
3. Next, you will see a summary of your retirement income.  Choose to edit the income.
4. Now, you will see Tell Us About Your Retirement Income, where you can choose to indicate the entire amount in non-taxable, or enter the basis to be taxed on the earnings, if under 59.5.