Consider a Rollover v.s. Cashing Out a 401- K

Individuals cashing out a $10,000 401-K can incur up to $4,000 in taxes and early withdrawal penalties. By cashing out a 401-K rather than completing a rollover, investors could lose out on potential for capital appreciation of their funds which are in the account.  Therefore,  individuals  may  want  to consider transferring their 401-K or simply rolling the funds into an IRA.

If an individual takes a cash distribution from their former employer's 401-K plan, taxes and penalties may be avoided by rolling the account over to an IRA within 60 days.
 
Taxes withheld by the IRS upon distribution can be recouped by contributing the full amount (distribution plus withheld portion) to the new IRA.  However, if the individual simply completes the rollover without taking a cash distribution, the account may not have any deductions withheld.