I am 56 years old and am close to losing my job. I have approximately $21,000 in a 401k plan with my current employer. Will I be excluded from the 10% penalty because of my age? Will the entire amount of my withdrawal be treated as income for the year I receive the withdrawal?

The entire amount will defnitely be treated and taxed as income.

You may be able to avoid the 10% Early Withdrwal Penalty, depending on the nature of your "departure" from your current job.

In any event, I recommend you roll the money over to an IRA and avoid taking any distribution if you can avoid it.