When I make a withdrawal from a 401K they add the federal tax for the tax % I fall into.
The thing I am having a problem understanding is,
If they are making me pay federal taxes on my withdrawal and adding the taxes to my total withdrawal which becomes taxable income. Then at tax time I am taxed at my total income with includes the taxes they withheld and added to my total withdrawal . How is that not double taxing me for the amount they added to my 401K withdrawal for taxes? seems I am sending the Federal Gov. the taxed for the income % rate of the total withdrawal and then IRS looks at total and I am taxed again???
I realize they are withholding and sending that to the IRS but it is still being added to my total imncome which is used to determine my taxable income for the year...
