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Case Study 1: Individual Retirement ArrangementsRichard contributed $500 a year to a traditional IRA. Each year he deducted his traditional IRA contribution from his income. This year he received his first distribution from the traditional IRA. It is fully taxable. Richard will pay income tax on the distributions he receives, which represent the contributions he made and deducted as well as the earnings on these contributions.
Click here for an explanation on why his earnings are taxable. Earnings and investment gains in a taxpayer's IRA generally accumulate tax free or tax deferred until they are withdrawn as fully or partially taxable distributions. 
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Income — Retirement Income Workout
Retirement Plan Distributions
Pub 4491, Retirement Income Lesson