Question:   If taxes are withheld from a distribution from a 401(k) plan, am I required to include the amount of the distribution as income and also pay the 10% additional tax?

Answer:   Generally, you need to include in income the total amount of the distribution, as reported on Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

If the distribution occurs before certain conditions are met (for example, before you are age 59 ½), you may need to pay a 10% additional tax on early distributions unless you meet one of the exceptions. See Publication 575, Pension and Annuity Income. This 10% additional income tax is in addition to other taxes that apply to the distribution.

The federal income tax withheld from the distribution along with federal income tax withheld from other sources should be reported on the appropriate line of your federal tax return.