We already know that the capital gains and dividends of 401k is not taxable.
Also you get a 10% early withdrawal penalty if your under some certain age like 65 or something.
We know interests, dividends outside of the 401k are taxable as ordinary income
when you take a 401k distribution it is taxed at your current tax rate based on how much you earned that year, taxable as ordinary income. So what if you are under 60 but you retired and earned 0$ that year, does that mean that your 401k distribution (lets say 100,000 was withdrawn) is only taxed at 10%? Federally: $0-7,825 is taxed at 10%.
I guess my question is: does the 401k distribution count as income for tax purposes?