Yes. Money you take out of a retirement account is taxable income. You will get a 1099R to enter on your return.
To enter your retirement income, Go to Federal> Wages and Income>Retirement Plans and Social Security>IRA 401 k) Pension Plan Withdrawals to enter your 1099R.
Yes it does but it depends on several factors. Here are some guidelines to use in determining if your withdrawal is/will be taxable. Most withdrawals are taxable.
Generally, anyone can make an early withdrawal from 401(k) plans at any time and for any reason. However, these distributions typically count as taxable income. If you're under the age of 59½, you typically have to pay a 10% penalty on the amount withdrawn.
For traditional 401(k)s, the money you withdraw (also called a “distribution”) is taxable as regular income — like income from a job — in the year you take it. (Remember, you didn't pay income taxes on it back when you put it in the account; now it's time to pay the piper.)
Use this Link for additional information regarding Distributions