There is an exception to the early withdrawal penalty for Medical. Exceptions for Early Distributions from a Qualified Retirement Plan such as a 401(k) or 403(b) plan. See Pub 575 page 35
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..Distributions upon the death or disability of the plan participant.
..You were age 55 or over in the year you retired or left your job. (50 for qualified public safety employees)
..You received the distribution as part of "substantially equal payments" over your lifetime.
..You paid for medical expenses exceeding 10% of your adjusted gross income.
..The distributions were required by a divorce decree or separation agreement ("qualified domestic relations court order"),
Now that you have realized the income, there is very little you can practically do to reduce your taxes. You have 60 days to replace the money in the same 401(k), or to roll it over into a private IRA. If you can't roll it all over, the more you roll over into the IRA, the lower your income tax and penalties will be.
You may be able to each contribute up to $5500 in a new IRA, depending on your eligibility.
You can make charitable contributions, but then of course, you won't have the money yourself to spend. In fact most of the strategies to reduce tax in your situation require that you spend at least two dollars to save one dollar in taxes and penalties. You either need to have massive medical bills, or make a large contribution to charity, or put the money away in an untouchable IRA.
If you needed access to some of the money, your best option would have been to roll over the entire amount into an IRA, and then only withdraw the minimum that you need for your emergency. That way you would only have been taxed on the minimum amount that you need to withdraw, instead of being taxed on all of it.
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