Because he withdrew money before he died, it will be reported on his tax return. Of course, your GD is allowed to file a joint return for 2024 if she chooses, so the income is reported on their joint return.
You don't mention any specific exception he might qualify for. Unfortunately, passing away after a withdrawal is not, by itself, an exception. Exceptions to 401k withdrawals are listed here.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...
Your GD now has an "inherited" 401k account, and she has a number of options. Withdrawals she makes from the inherited account are probably excepted from the 10% penalty (they are for IRAs, I assume the rules for 401(k)s are the same but I haven't checked). But withdrawals he made while he was alive are controlled by the rules that apply to him as the owner, not her as the heir.
