The box 4 tax withheld is indeed included in the box 1 taxable amount, because it is just another part of your taxable distribution. The box 4 amount will be added to all other W-2 and 1099 withholding on line 17 on the 1040 form to offset your overall tax liability. No different that if you did not have any tax withheld and received the entire distribution in cash and then just paid the tax by writing a check from the amount received.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
