You will have to pay tax at your marginal tax rate on withdrawals. You have to have all of the amount in the account distributed within 10 years.  

a 401k is regarded as income in respect of a decedent. as such it gets no step-up at date of death. 

If there was no beneficiary listed and the estate got the distribution then  either it can pay taxes at  a very high estate rate or pass it thru to the beneficiaries to be taxed at their lower tax rate.  If the issuer withheld taxes then they are put on the estate return to be used or refunded ... this cannot be passed thru.   Seek local professional assistance if you are unsure how to properly file a form 1041.

Can the money be moved into another tax deferred investment?

@dfwsharp1967 

No it cannot if the estate is the beneficiary.

Thanks so much!  Will I have to file tax returns for them or the estate for this year?

YES ... if the estate recieved $600 or more of income then it must file a return ... please seek local professional assistance if needed. 

Here is some basic info ...  https://www.irs.gov/individuals/deceased-taxpayers-probate-filing-estate-and-individual-returns-payi...