A distribution paid to you as a non-spouse beneficiary is not permitted to be rolled over. The taxable amount of the distribution, which is often the entire distribution, is includible on Form 1040 line 5b.
Taxes were withheld from the distribution. Tax withholding from any source is nothing more than a down payment toward the overall tax liability determined on your tax return. Tax withholding from Forms 1099 is included as a credit on Form 1040 line 25b. The actual addition to your tax liability caused by the distribution from the inherited 401(k) is not determined until you prepare your tax return.
