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Well, you should be able to roll the the deferred compensation plan payment you receive into an IRA and hold the money in the IRA until you need to use it for tuition. At that point you will need to withdraw it as you need it for the college expenses, but you will want to take as little as possible so that you can spread it out & minimize the income tax and any early withdrawal penalties. You may qualify for exceptions to the early withdrawal penalties based upon your circumstances at that time as well as because of what expenses you are using the withdrawals to fund.
No. What you need to do is to ask for a "Trustee to Trustee" transfer.
Once you have the paperwork asking you what you want done with the funds or informing you how much you have coming, you need to take all that to wherever you wish to open your tranditional IRA. They will make the transfer directly from the plan to your IRA and there will be no withholding.
You won't be paying any income tax on the rollover.
When you start to take the funds out, you will pay income tax on the withdrawals, but there are exceptions to the 10% early withdrawal penalties; for example if use for college tuition and fees no penalties will apply.
So you need to follow that procedure to come out with the least amount of tax & penalties.