It depends, but it's likely you will have to pay more. When you take an early withdrawal from a 401(k), you are subject to 2 Federal taxes: your marginal income tax (the tax for the tax bracket this income puts you in), as well as an early distribution penalty (10% of the distribution, unless an exception applies). Presuming the distribution is all "taxable income" (in other words, none of it is exempted by the standard or itemized deductions), at minimum you would pay 20% tax on the distribution (10% is the lowest tax bracket, plus an additional 10% for early distribution penalty), so a 20% withholding would only cover that scenario. If you are in a higher tax bracket (such as 12% or 22%), the actual tax will be 10% plus the bracket. Your withholdings won't be keeping up with the actual tax on the distribution if that is the case. However, if you can exempt some of the distribution from the penalty and your income is low, then it is possible that you could see some additional refund generate from the tax withheld on the distribution. There's a number of possibilities, but most end up in more tax than what was withheld.
If you claim credits such as the Earned Income Credit or Additional Child Tax Credit, be aware that an early distribution from your 401(k) is not earned income and would affect these credits in a negative way.
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