What's the 401k penalty if you have very low income and may not have a federal tax burden at all? Just the 10%?

Question by wrda: What's the 401k penalty if you have very low income and may not have a federal tax burden at all? Just the 10%?
If the taxes and penalty are prohibitive to taking out 401k money, what if a person normally has no tax burden (EIT credit recipient)? We're only talking about $ 5k, for a one-time debt relief related to a divorce. If the penalty is only $ 500, it may be a useful option, where no other solution is available. Is there something I'm missing?


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