If I am 61, why am I being charged tax on my 401k withdrawal?

[DoninGA]

The withdrawal of 401(k) funds is a taxable event regardless of your age. 

Since you are older than 59 1/2 there is not a 10% early withdrawal penalty being assessed as a liability on your federal tax return, Form 1040.

[MelindaS1 · Accepted solution]

You are subject to tax at the ordinary income rate for withdrawals from your 401k, but you are not subject to the 10% early withdrawal penalty after age 59 1/2. 

A 401k plan is a tax-deferred plan, meaning you are not taxed at the time of your original contributions (which help lower your AGI throughout the years, saving you money early-on on taxes), but you are taxed now at your ordinary income rate as you take those withdrawals of previously untaxed income. Your 401k contributions were also invested in various stocks and bonds over the years, which earned interest, dividends and appreciation in value, and that additional income is also taxed at your ordinary income rate. 

Learn more: TurboTax - 401(k) FAQ