In 2010, Pamelia invested $5,000 in a Roth IRA. In 2016, at age 60, Pamelia withdrew the entire balance, which then totaled $7,000 with the earnings that had accumulated over the years. What is the tax treatment of this distribution? The $7,000 is not included in income, but Pamelia must pay a 10% penalty on the entire distribution. The $2,000 in earnings is included in income, and Pamelia is required to pay a 10% penalty on the entire distribution. The $2,000 in earnings is included in income, but there is no penalty. None of the distribution is included in income, and there is no penalty.