I am so sorry this happened to you. Unfortunately, your situation is a common one for people when they retire or change jobs and move their 401(k) account. Handling this rollover on your own creates a lot of tax problems, even if you do everything perfectly. Below are some ideas to help you, but first the answer to your initial tax questions.
ALSO COVERED:
What Happens to Taxes.
Doing a 401(k) or IRA Rollover On Your Own.
Fixing an Indirect Rollover.
Making Up The Lost Retirement Account Balance.
Managing Taxable Investments vs. Retirement Investments.