For my answer, I am going to ignore any State withholding on $240,000 (unless you tell me the state ...).

There should be a 30% automatic withholding right off the top (10% for being younger than 59 1/2 plus 20% as the mandatory Federal Withholding on most 401(k) Distributions).

You do have some leverage with changing the withholding percentage before they actually get ready to cut the check, but you need to talk it over with the Plan Administrator for your particular 401(k).

At most, I normally expect 70% to reach your hands, or about $168,000. In other words, at least $72,000 in taxes and a penalty would be taken before you ever see the money.

P.S.: Personally, I would like you to Roll as much of this over into an (Deductible) IRA as you believe you can afford, and well within the 60 day limit for Rollovers. However, since I do not have anywhere near enough details about your full financial situation, I am recommending that you find a Financial Planner (with either a Tax- or Retirement-based specialty) to help you make the best decision for you.