What you do with the excess funds is your choice. There is no requirement for you to do anything with the funds received from the withdrawal from the 401(k) account.
For a withdrawal from a 401(k) account in 2019 you will receive a Form 1099-R from the plan administrator in January 2020. The Form 1099-R is reported on your federal tax return. The taxable amount of the withdrawal is entered on your tax return as ordinary income and taxed at your current tax rate.
If you do not have an exception to the early withdrawal penalty there will the a 10% penalty on the amount withdrawn assessed and entered on your federal tax return.
IRS Tax Topic Additional Tax on Early Distributions from Retirement Plans Other than IRAs - https://www.irs.gov/taxtopics/tc558
