Hello,
I am in the process of pulling my 401k. I need the money to pay off medical bills from before I had medical insurance. I have to pay 10% penalty plus Federal and state taxes which add up to like 42%.. Anyway, I have no choice at this time... My question is: what is the best way to go about paying? Should I take care of all taxes on my own? Or should I have the investment company I have my 401k plan with take care of all that? Also.. I am taking this out in 2007... This will be applied to next year right??

I would seriously advise using a credit card to pay the medical bills. Its not worth giving away 42% of your 401k to get out that money. Invariably, you'll regret that down the line.