10% penalty applicable for Roth conversions?

[Guest jusducki]

Does the penalty for 'early' disbribution still apply if IRA funds were simply converted to a Roth IRA? 1099-R states Code 2 which means no 10% penalty (in my opinion) but accountant seems to think there is....thanks

[Lame Duck]

IRC Section 408A(d)(3) specifically provides that Section 72(t) does not apply to any rollover from an IRA other than a Roth IRA. 408A(d)(3)© provides "The conversion of an individual retirement plan (other than a Roth IRA) shall be treated for purposes of this paragraph as a distributio to which this paragraph applies."