401 k lump sum withdrawal

Do you need all of it?  You can rollover part or all to a Traditional IRA account to defer the taxes.  You have 60 days to do a rollover.  The best way is to have it directly transferred from the 401K.

Yes, the gross amount and taxes withheld get reported on your tax return.  You will get a 1099R at the end of the year to enter into your return.  

don't take a lump sum from a 401k. instead do a trustee-to-trustee transfer to an IRA you set up. the new trustee will assist you with the paperwork.

then take small distributions when and if needed.