So, I estimated that your gross distribution will be $125,000.
This will push your income to $94,000 + $125,000 = $219,000 and your tax bracket will be 28%
your early distribution penalty will be 10% - $12,500
your income taxes (assuming standard deduction - $10,700 for 2007, two dependents, married filing jointly) - ~$50,000. State taxes if any - will be an additional
Because of high adjusted gross income - you will not be eligible for the educational expenses deduction.
Without distribution - your federal tax liability would be ~$12,700. - means your additional taxes would be ($50,000 - $12,700) + $12,500(penalty) = ~$49,800 plus educational credit.
Please think twice before taking distribution.