If your friend takes a lump sum distribution payable to him/her, the full $150,00 wil be considered taxable income and they wil have to pay taxes on the full amount. Since this is a large amount, they will be in a pretty high tax bracket. The best thing to do is transfer the money from the 401k, (I'm assuming its in a 401k)and transfer it to an IRA account. An IRA of that size should come with no service fees. Your friend should try to open an account at a firm like Vanguard or Fidelity, where you can invest in hundreds of mutual funds without transaction costs.Your friend can then set up monthly withdrawals, this way you only withdraw the amount you need when you need it. Then you only pay taxes on the amount withdrawn.If a discount broker isn't a viable option, then shop around at your local banks to open an IRA.Bill
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