That means there is no penalty for early withdrawal.
Input the 2 and be done with that portion of the return.
It means they were under 59 1/2 years old, but no early penalty applies.
Here's a reference article that might be helpful:
https://thelink.ascensus.com/articles/2020/12/16/irs-form-1099-r-box-7-distribution-codes
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