Basically, you need to find an equal amount of money to the deemed distribution that you can deposit into an IRA or into a 401(k) at a new place of work, within 60 days of the distribution date. If you can do that, you would tell the custodian of the new plan that this is a rollover. Then, you would not owe tax and a 10% early withdrawal penalty on the distribution amount. If you can borrow the money at a decent interest rate, you will probably come out ahead in the long run by taking out a private loan that will allow you to deposit the distribution amount into a new account and call it a rollover.
