taxation and witholding on beneficiary payouts

[K2]

A participant passes away, and her three children are her beneficiaries.  They are over 18.  They want to withdraw funds to pay for her funeral expenses?  Are they subject to the mandatory 20% income tax witholding and 10% premature distribution excise tax?  I would think not, since they can't roll this over.

[justanotheradmin]

14 minutes ago, K2 said:

 I would think not, since they can't roll this over.

Unless the rules have changed they can roll over to an inherited IRA. 

14 minutes ago, K2 said:

10% premature distribution excise tax? 

Distributions due to death are exempt from the 10% ( I believe a code 4 is used on the 1099-R along with another code). 

15 minutes ago, K2 said:

Are they subject to the mandatory 20% income tax witholding 

Yes - any distribution eligible for rollover is subject to the mandatory 20% withholding. Since this distribution is eligible for rollover, it follows that the 20% withholding rule applies.