My wife passed away and left me her 401k. The total estate value is below the taxable threshold. Can I take the dispursement without penalty, how long do have to act on this? It has not been moved from her employers 401k program.

The 401K can be disbursed to the beneficiary without paying the 10% Early Withdrawal Penalty.

However, the disbursement WILL be taxed as ordinary income by both the federal and state (if the state has a state income tax).

You also have the option of rolling all or a portion of her 401(k) into your own IRA, thereby continuing tax-deferral until you start taking distributions.

Excellent point, ebaines; something I should have pointed out.