You do not have to use any sort of "classification" ---PA does not tax retirement income. You will enter your 1099R into the federal software. Information flows from the federal return to the state return. The software will follow your state's tax laws pertaining to which income is taxable in PA.
To enter your retirement income, Go toFederal> Wages and Income>Retirement Plans and Social Security>IRA401 k) Pension Plan Withdrawals to enter your 1099R.
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