You are exempt from the penalty, but you still pay the ordinary income tax on the distribution, 401K withdrawals are taxable. The 8915-E gives you the option of paying the ordinary tax over 3 years. If you had federal tax withheld, you will get a refund for any overpayment you made if you elected to spread the tax. The withholding is a flat 20% but that is not necessarily what you owe for taking the withdrawal. It is just an estimate and is reconciled on your tax return.
When you get to the question about spreading the tax, you are actually completing the 8915-E by answering those questions.
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