No, you do not need a beneficiary to open a 401k.

If you do have one, that beneficiary will be the one who gets the money. If you don't the spouse would. If that is not an option the 401k balance would go to the estate and the beneficiaries of the estate would get the money.

If there are no written, legal beneficiaries, the order of precedence should be:

1) widow or widower (living wife or husband)
2) child or children -- or descendants of a deceased child
3) parents (mom and/or dad)
4) court appointed executor or administrator of the estate (your aunt, in this case)
5) next of kin as determined by your state

If there's no named beneficiary, the money would go into his estate and be settled along with the rest of it.

If you think your aunt is not acting properly in doing her duties, you have every right to present your concerns and ask that a new executor be named. Just because she's the executor doesn't mean she gets to help herself to your father's estate. She needs to present a full accounting. If you suspect she is helping herself the courts can persue her for her lack of fiduciary duty.

I am 60 years old and my husband just passed away leaving a $175,000 401. I will need some of this money to live on so i don't want to tie it up in anything long term. Is a money market account the way to go and will i have to claim it on taxes as soon as i transfer it?

Xxxiii911, once you take the money from the 401(k) it will be taxable to you. If you take the whole amount, you will find yourself in a high tax bracket, so you might want to look into taking it out over several years.