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I believe the responses to your question are accurate except that one thing was left out. So lets try this.

You will roll your 401k into a traditional IRA as explained. No problem. Then you will roll the traditonal IRA into a Roth. At this point the entire amount becomes taxable at regular income tax rates. That money can then be withdrawn from the Roth as you wish, tax free. Given your current age, any gain on the Roth contribution must be left for 5 years in order to tax and penalty free.

I hope this clarifys the situation and this and the other points completely answer your question.

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