Why are there PA state taxes on my 10999r distributions with a dist code of 7

[SweetieJean · Accepted solution]

Code 7 Normal Distribution. This distribution from an eligible Pennsylvania retirement plan is not taxable if you met the plan requirements (the age and/or years of service required by the plan) for retirement, and retired after meeting those requirements.

However, If you invested in a retirement annuity that is not part of an employer-sponsored program or a commonly recognized retirement program, you have PA taxable income when you begin receiving annuity payments. 

https://revenue-pa.custhelp.com/app/answers/detail/a_id/1470

[re2boys]

1099R with code 7D is taxable in PA.
You made the wrong selection when asked if what type of retirement income each 1099R represents.  If it is just code 7, select, "Im eligible, pension eligible.  If 7D, select commercial annuity.