How does it work out if I want withdraw my 401K balance of $5k? What are the penalties and how does the taxing on that work out?

First its not a good idea to piggyback your question on someone else's. This can lead to confusion. You should start a new thread. So I've moved your question to its own thread.

Not all plans permit an inservice withdrawal. If your plan allows it they will generate withhold 20% towards your federal tax liability. IN addition you will be required to pay 10% as a penalty. The amount of your withdrawal is added to your total taxable income to dtermine actual liability.

Why not take a loan against your 401K instead.