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It never hurts to be reminded that just because you can do some thing does not mean it is the best thing to do. Are you receiving advice about the wisdom of using your 401(k) money for the purpose you intend?

You need to check your plan's legal document for hardship provisions (safe harbor vs facts & circumstances). That may not qualify and your plan may not even allow hardship withdrawals. If your plan allows for in-service withdrawals at 59 1/2, and you are that age or over, the 10% penalty won't come into play. You can specity the tax amount you want taken but that won't guarantee you won't owe in April. I'm not qualified to give tax advice. Hope that helps.

I'm unsure whether 409A applies but have an example to provide. Somewhere around 2005, a relative of mine was retired and had life insurance and health insurance thru his/her employer. The ER decided to discontinue both and paid him/her a lump sum as a "going away gift." (As far as I can tell, the ER was under no legal obligation to pay anything.) My retired relative got a check, and it was fully taxable with a W-2. That meant he/she was responsible for FICA taxes as well as income taxes.

Loans only have to meet the 50% criterion at issue. After that, it’s irrelevant.

AI has a tough time saying anything meaningful about pension topics, as evidenced by the prior post.

How do you enter into a collective bargaining agreement and not keep a copy? Yes you can file a late 1099-R, as you have discovered, penalties apply. The participant is probably fine as the taxable amount will be $0 if it was properly rolled over. But the plan has a duty to file the 1099-R and supply to the participant. At most he'd need an amended return showing ~$1.5M distribution, but report it as non taxable rollover.

I’m not where I can look up a bunch of stuff, but related to item #1, I can’t imagine anyone agreeing to benefits and wages as part of a collective bargaining agreement and not knowing exactly what that agreement said and where a copy was kept. What a stupid way to run a business.