Yes, if you are under the age of 59 1/2 at the time of the withdrawal from the IRA. you have to pay the early withdrawal penalty of 10% in addition to income tax on the amount withdrawn. To withdraw from the IRA to pay your 401(k) loan is not an exception to the early withdrawal penalty.
The 20% federal tax withheld will be reported on your form 1099-R and will help alleviate the amount of tax due on the withdrawal.
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