The distribution is added to the AGI, It is the 10% penalty for early withdrawal that is waived.
But you can reduce the effect on your AGI, by spreading the distribution over three years and filing Form 8915-E. You can also reduce AGI by paying back the distribution.
When you enter your Form 1099-R, we’ll ask you a few questions to determine your eligibility for the exemption, and complete and include Form 8915-E in your return if you qualify. It allows you to spread the taxable portion of the distribution over three years.
Here are details on Form 8915-E
