What is the taxation of retirement account distributions?

@lucienne 

The taxation of retirement account distributions depends on the type of account and the age at which the distributions are made.

1. Traditional IRA and 401(k): Contributions to traditional IRAs and 401(k) accounts are made on a pre-tax basis, meaning they are tax-deductible in the year of contribution. However, when you take distributions from these accounts, they are taxed as ordinary income. The tax rate will depend on your total taxable income and applicable tax brackets at the time of distribution.
2. Roth IRA and Roth 401(k): Contributions to Roth IRAs and Roth 401(k) accounts are made with after-tax money, meaning they are not tax-deductible in the year of contribution. However, when you take qualified distributions from these accounts, they are typically tax-free. To qualify, the account must be open for at least 5 years, and the distribution must be made after age 59½, due to disability, or for certain qualified reasons.
3. Early withdrawals: If you withdraw funds from traditional IRAs or 401(k) accounts before age 59½, you may be subject to an additional 10% early withdrawal penalty, in addition to the regular income tax.
4. Required Minimum Distributions (RMD): When you reach age 72 (prior to 2020, it was age 70½), you are generally required to start taking RMDs from traditional IRAs and 401(k) accounts. These distributions are taxable as ordinary income and must be taken annually, based on your life expectancy and the account balance.

It's important to consult with a tax professional or financial advisor to understand the specific rules and implications of retirement account distributions in your situation, as tax laws can change.