I understand that withdrawals from 401K accounts during 2010 can be spread over the 2010 and 2011 tax years for tax purposes. I.E. if I take out 100K in 2010, I can pay taxes on 50K in 2010 and 50K in 2011. Is this correct?

Unless there is a change in the tax law of which I am not aware, that is NOT the case.

If you make the withdrawal in 2010, you pay ALL of the taxes in 2010.

jaddison - I think you may be thinking about a provision that allows people to roll their traditional pre-tax IRA to a Roth post-tax IRA and spread the resulting tax payments over two years. This provision for spreading out the tax payments applies only to a conversion from traditional to Roth IRA made in 2010. As AtlantaTaxExpert says - this spreading of taxes does NOT apply to withdrawals from a 401(k).