Check with your plan. Most plans have mandatory payout rules on when and how beneficiaries will be paid.
There is no penalty if the distribution is made to a beneficiary due to the death of a participant.
The amount is taxed as regular income.
You can roll over the distribution into an IRA.
Here is a helpful article by CPA Aaron Juckett: ESOP Distribution & Taxation: How Does it Work? What Are the Rules?
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