She does not have to pay the 10% early withdrawal penalty. As a non-spouse beneficiary, the funds would have needed to transfer to an inherited IRA or IRA-BDA. Once in the inherited IRA, she could have taken a full distribution. If not a full distribution, she would have had to take the mrd each year if your grandmother was over 70 1/2. The distribution should have come from an inherited IRA. There should have been a 1099R with a distribution code of 4, which is a death distribution. She definitely needs to pay taxes on it.
Non-Spouse IRA Beneficiary? - Fidelity
That being said, I am not a tax consultant or an accountant. So, maybe someone who is can chime in to verify. I may be wrong about the IRA-BDA but our firm requires it for the distribution.