In what circumstances is a distribution code 7 not taxable?

[George4Tacks]

There are several, what does the 1099R you have look like? What prompted your question. 

If 2a is blank and 2b is checked that does not mean a zero in 2a.

If it is an IRA do you know the basis for that IRA?

[CS]

This 1099 r relates to a pension from an airline. The taxpayer  fulfilled all the requirements for age and years of service. 

[George4Tacks]

Then code 7 is the appropriate code. It means there is no penalty because as you said "fulfilled all the requirements for age and years of service" but it is likely at least partially taxable.