If the 401k closed down, he had the option of rolling over his retirement funds into an IRA so they could continue to grow tax-free. If he kept the money, that's taxable plus a penalty. Simple unemployment is not an exception to the 10% penalty.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...
Any tax that was withheld is only an estimate. He must report the full amount of the withdrawal on his return from the 1099-R the plan will send, and he will get credit for the withholding. His overall income, deductions and credits will be used to calculate his tax owed, plus penalties, and he will either owe or get a refund depending on if his withholding is more or less than what he owes.
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