Yes, it is normal and common to have a refund dropped when reporting early withdrawal from a retirement plan, unfortunately. When the
distribution is an early withdrawal, you are subject to an additional tax of
10% (unless certain exception applies) and the distribution is subject to your
"regular" ordinary income tax based on your total taxable income
reported. You may have paid taxes on the withdrawal (box 4 on the form), but most likely it does not
cover all other taxable income, that's why the refund drops. The tax return will drop to reflect the penalty and ordinary tax on your income tax return.
