401k withdrawal (read before assuming)

I (30yo Male) and my wife (30yp Female) have been discussing a change of life and it would require me to pull money from my 401k.

I left a pretty lucrative job making 120k plus a year at a steel mill in Kentucky to work as a painting estimator with the place my wife is employed. Unfortunately it’s not working out, and I’m looking to return to my previous employer (they’ve already told me they’d take me back). The work is swing shift and we have a son (2yo) who we want to have a brother and sister, but don’t want to pay for childcare.

After discussing our finances, we realized I could return to work at the mill if my wife stayed home with our child (and be able to have a second) but I’d need to pull from my 401k from previous employer/returning employer to do so. It’s about 45k in student loans and car (newer car) we’d be paying off. I have 208,000 in my 401k.

My questions: (1) am I crazy, or does it make sense to do this and have peace of mind?

(2) How much would I actually have to withdraw to get those paid off and pay for the taxes and penalties

(3) What should I expect being single income on my future taxes

Thanks for any and all help!