Those who took out the cash before age 59 will owe a 10% early withdrawal penalty, too.

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That means you can withdraw those funds without paying additional income tax or the 10% early withdrawal penalty.

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Furthermore, missing the 60-day deadline for completing the rollover could penalize you further with the 10% early withdrawal penalty.

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Congress has created temporary exceptions to the 10% early withdrawal penalty too: for hurricane victims and for reservists called to active duty.

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But strange as it may sound, you may be better off taking an immediate tax hit--including a 10% early withdrawal penalty--with appreciated shares of company stock.

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Even the 10% early withdrawal penalty shouldn't dissuade you.

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Here's how to avoid the 10% early withdrawal penalty.

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The early withdrawal penalty is 10%.

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In some cases, this may mean losing a bit of principal if investors haven't incurred enough interest to cover a CD's early-withdrawal penalty, notes Greg McBride, senior financial analyst at Bankrate.com.

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If Sally needs to tap the funds for college she'll owe tax on any earnings she takes out, but no penalty for early withdrawal since the money is being used for education.

FORBES: Money & Investing