You won't have to report anything if you roll it over into another retirement plan, such as at a brokerage house like Fidelity or T. Rowe Price. Your human resources department should be able to provide information on how to roll over your 401-K. That way, there are no tax consequences or penalties for early withdrawal, and you continue to reap the benefits of having money set aside for retirement.

If you don't take your 401k now, you don't have to pay any tax on it. If you do, this amount of $1,351 will be added to your total income for the year and you have to pay whatever tax bracket you are in plus 10% of penalty if you are younger than 59 1/5.

You can roll over your 401k to a new employer plan (if they provide you with one) or you can open individual 401k account. I have mine with Vanguard and I am very happy with it. In this case you avoing paying taxes and penalties.