Yes, the 10% penalty for early withdrawal is applied regardless of amount.

Imho is correct. 10% that will be paid when you file your 2010 tax return in 2011. As long as you are under the age of 59.5. You can have them deduct 20% from the amount in your account and pay it to the IRS now, so that you don't have to worry about coming up with the money by 4/15/2011. The whole amount becomes taxable income to you, because it was paid in through your employer on a pre-tax basis. So it increases your income for 2010 and increases your tax liability for 2010, and the 10% penalty is on top of that.

Hello:

Yes. I would roll it over to an IRA at Fidelity and keep it. You can then have more control over what you invest in.

Thank you.

It is never a good idea to withdraw your funds from you 401k. It can result in a 10% penalty.

If the account is small enough, the trustees will send you a check, usually without even asking. They are allowed. I forget if the threshold is $3000 or $5000, but most 401(k) trustees don't like the expense of holding small accounts for no-longer-contributing members. The trustees do not normally charge for this.

If you get the distribution, you have to option of putting it into an IRA within 60 days. But also talk to your tax advisor as soon as you get the money. There might be taxes and tax-related penalties, and a tax advisor can tell you exactly what they would be and how to avoid them.