Thank you. Noted about how to not have the 20% withheld. I am looking to understand what penalties there are when I withdraw said rolled over money from that IRA.

Like I said in the answer, other then the normal tax, the only penalty on a Traditional IRA distribution if a 10% early distribution penalty if you are under age 59 1/2 and do not qualify of one of the exemptions to the penalty.

There are several exceptions to the age 59½ rule. Even if you receive a distribution before you are age 59½, you may not have to pay the 10% additional tax if you are in one of the following situations.

    You have unreimbursed medical expenses that are more than 10% (or 7.5% if you or your spouse was born before January 2, 1952) of your adjusted gross income.

   - The distributions are not more than the cost of your medical insurance due to a period of unemployment.
   - You are totally and permanently disabled.
  -  You are the beneficiary of a deceased IRA owner.
   - You are receiving distributions in the form of an annuity.
   - The distributions are not more than your qualified higher education expenses.
   - You use the distributions to buy, build, or rebuild a first home.
   - The distribution is due to an IRS levy of the qualified plan.
   - The distribution is a qualified reservist distribution.

Except for a few differences in available early-distribution penalty exceptions between 401(k) distributions and IRA distributions, the liability and penalty will generally be the same either way.

<a rel="nofollow" target="_blank" href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distri...>

Thanks so much. I totally missed seeing that information in the original comment. Thank you for your expanded answer here as well! Appreciate it.

And as dmertz said, the tax and penalties are virtually the same whether you roll the 401(k) into  Traditional IRA and then take distributions from the IRA or if you just leave the 401(k) and take distributions from that.  

Some people prefer an IRA because of more feasibility in investment choices, but the tax treatment is almost identical except for minor differences in the exceptions to the penalty.

Thank you!