Unfortunately, you are focused on only one aspect of the tax consequences of an early distribution from a qualified retirement plan.
Any amount distributed prior to age 59 1/2 is subject to the 10% penalty tax, which you referred to in your question. In your case, based on the $2,600 penalty tax, your actual distribution would have been $26,000. I believe you may have overlooked the fact that, if a plan has been funded with pre-tax contributions, subsequent distributions are taxed as ordinary income. In your case, the distribution resulted in an additional $26,000 being taxed as ordinary income in 2018 plus the 10% penalty for early distribution.
