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My company just merged with another company recently. Now I have the opportunity to do somthing about my money in my 401K plan. Here is a brief summay of my plan:

$40K in company stock with cost basis of $3.3k or 8.3%.
$60K in various funds

My age is in 30s, so I definitely need to pay additional 10% penalty on top of ordinary tax if I take out a distribution.

Here are my questions:

1. I heard that tax and penalty assessed on the cost basis of the stock instead of on the whole amount. This will only cost me about $1155 for withholding. Can some one confirm that?

2. Is it allowed to only take stock portion out and roll the rest over to an IRA or my current company's plan? Seriously thinking about this option but don't know if it is feasible.

Thanks in advance!

Bin
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