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Lump Sum 401k Distributions & Taxes

Can I take a lump sum from an old 401k plan and use 10-year averaging?
Not likely.  The 10-year income-averaging break, which essentially treats a lump-sum payment as if it were stretched over 10 years, is only available for recipients who were born before January 2, 1936. In other words, you have to be at least 80 years old to qualify for this tax break.
Other recipients must pay the full amount of tax owed at ordinary income rates reaching up to 39.6%. To reduce the tax, you might “income average” yourself by spreading out 401k distributions over several years if the plan gives you that option.  Annual distributions from retirement plans generally must begin after the later of your retirement or attaining age 70 ½.
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