Yes, the earnings will be subject to the 10% early withdrawal penalty.
The taxes you withheld have to be applied to your 2021 tax return because they were withheld in 2021. Therefore, you will have to pay the taxes on your amended 2020 return but you will get a credit for the taxes paid on your 2021 return. Please make sure your enter the 2021 Form 1099-R with codes PJ on your 2021 tax return. The 2021 code P will not do anything to the 2021 tax return but the withholdings will be applied to 2021.
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