Originally Posted by Raptor

My thoughts:
1) make sure it is a trustee to trustee rollover. (By this I mean you don't get sent the money personally and then have 60 days to roll it over.) If you do trustee to trustee (i.e. Vanguard to Vanguard, Vanguard to Fidelity, etc) you won't have any withholding. If you take the money personally and roll it over within 60 days, they are required to withhold both for state and federal.
2) Assuming you don't currently have any money in traditional IRAs: If you have ANY after tax money in the 401(k), specify to Vanguard you want every single penny of after tax money rolled over into one IRA account and all the pre tax money rolled over into a separate IRA account. (New IRS rules as of September 2014 permit this.). You may owe some taxes on your after tax money growth while in the 401(k), but you won't owe any taxes on the principal. Then, convert your new after tax money IRA immediately to a ROTH IRA account. This will be tax free conversion to a ROTH since it was after tax money. This "back door" conversion can be done regardless of your income. Contributions to a ROTH IRA are disallowed if your income is too great, but conversions aren't subject to this restriction! If you have traditional IRAs, then you'll have to decide on what is best for your situation as the tax situation is more complicated.
3) know why you want to rollover your 401(k) to an IRA. If, for example, you are solely invested in the Vanguard index fund and you were planning to roll over to a Vanguard or Fidelity index fund, that wouldn't be a smart move. You have a much lower expense ratio while invested in many of the Vanguard 401(k) funds (because the class of funds we are in are lower expense ratios based on the group pool of money we have invested) and expenses would be higher when the class of fund is different when you hold that money outside the group pool in an individual IRA. But, if you want to rollover your money because you will have access to brokerage accounts, or other funds that aren't offered in the limited range of funds available in our Vanguard 401(k)s, that would be a good reason.
4) rules were reinterpreted by the courts in 2014 that now limit you to ONE rollover per year now. So, make your rollover wisely: after tax, all, partial, etc. You can always revisit next year and rollover more.