You can roll the offset distribution over to any qualified retirement account, including to a traditional IRA, so there is no need to avoid rolling over the rest of the 401(k). You can complete the rollover to the Vanguard IRA if you like. If rolled over after the normal 60-day rollover deadline, which is the case here, be sure to tell the receiving IRA custodian that it's a rollover of an offset distribution because there are special reporting requirements on Form 5498 for this sort of rollover.
