Isn't the 10% penalty only on the interest? Mine hasn't made any interest. Therefore, I don't think there's any penalty, if you are only withdrawing the amount you funded it with.
Yes, that is correct.
So, I guess you can make principal withdrawals immediately after you set up the account, and take the credit on your return. Is that credit new—I’ve never heard of it?
I stand (some what) corrected!