Generally speaking, if you withdraw the funds before you reach the age of 59 1/2 and do not roll it over into another qualified retirement plan or Individual Retirement Account (IRA) within 60 days, that amount will be taxable income in the year in which it is withdrawn. You may also have to pay an additional 10 percent tax on early distributions. There are special rules for computing tax on lump-sum distributions. See IRS Publication 575 (http://www.irs.gov/publications/p575) for detailed information. For more information on the tax consequences of a job loss, see IRS Publication 4218 (http://www.irs.gov/pub/irs-pdf/p4128.pdf).
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