Form 1099-R, box 7 says "B2" but there is no selection for B2 unless I but "B" in top box and "2" in lower, which appear to contradict.

[dmertz · Accepted solution]

B and 2 are two separate codes and must be entered individually in the two drop-down boxes on TurboTax's 1099-R form.  Codes B and 2 together mean that the distribution was from a Designated Roth Account in a qualified retirement plan (B) but is not subject to an early-distribution penalty despite you having been under age 59½ at the time of the distribution (2).  The likely reason a plan administrator would know that the distribution is not subject to an early-distribution penalty is because you were age 55 (age 50 for a Public Safety Officer) or older in the year that you separated from service from this employer.

[pmbevac]

I have the same issue with a B2 code. Turbo Tax will not e-file with this "invalid" code

[dmertz]

Make sure that you do NOT indicate that the distribution was from a Roth IRA.  This distribution is from a Designated Roth Account in a qualified retirement plan like a 401(k), not from a Roth IRA.  Edit this Form 1099-R and correct this answer in the follow-up questions.