If you take the money out of the retirement account, the plan will send you a 1099R in late January or early February. The money you take out will be taxable, and you will need to enter information from the 1099R on your tax return. The financial institution that has the account will withhold at least 20% for federal tax; you might need to have them withhold state tax too. The amount of money you get will be entered on your next tax return, along with the amount that they withheld for tax. Depending on your other income, you might owe more tax, or you might get a refund of some of the tax that was withheld at the time of the distribution.
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