How do taxes on 401(k) withdrawals work?

If a lump-sum 401(k) withdrawal was taxed at the time of withdrawal, is that amount added to the entire annual income figure when filing federal taxes? If it is, it seems like it is being taxed twice. How do taxes on 401(k) withdrawals work?

401(k), Taxes
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April 2018

The amount you withdraw from a 401(k) will be taxed as ordinary income for the year you make the withdrawal. If you're under age 591/2 at the time of withdrawal you could be subject to the 10% penalty on top of paying ordinary income as well. 

It's not being taxed twice because when you contributed to the 401(k) the amount wasn't being included in your taxable income. The contributions were being "tax-deferred" until withdrawal. The major benefit of tax-deferral is it allows the funds to be invested and re-allocated while they're in the 401(k) without having to pay taxes.

On the other hand, Roth 401(k) withdrawals are tax-free, meaning you don't add the amount to your ordinary income in the year you make withdrawals. That's because you ALREADY paid taxes on the contribution amounts. 

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