I understood the original question to say that the OP tried to simply cash the check form the 401(k) plan but the bank insisted that it be put into another account (as they should for a check from a 401(k) to a rollover IRA). That distribution should have been reported as a non-taxable rollover with a 1099-R that probably has a code G in box 7.
The OP then immediately cashed out the IRA that probably generated a 1099-R with a code 1 in box 7 (if under age 59 1/2) or a code 7 of over age 59 1/2. That distribution would be fully taxable plus 10% penalty if a code "1".
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
