I know there's penalties involved. I only have $2000 +/-in an IRA, dh has substantially more. I'm just thinking about using that $2000 to float us through to November during the layoff.

   Ouch ... you'd lose 200 off the top, plus have extra taxes to pay.   If you could pay it back within 60 days, I'd suggest taking a loan against it....

   Another thought ... do you have any life insurance policies you could borrow against?

I have heard that you will lose about 40% of it through penalties and taxes.  

 
But cashing out of a 401(k) before you are 59 ½ can cost you dearly, both immediately and in the long run:

• If you do not transfer your money to an IRA or your new employer's plan within 60 days of receiving it, your current employer is required to withhold 20% of your account balance to prepay federal taxes. 
• If you keep the money, you must pay federal income tax on your entire withdrawal. In addition, you may also owe state tax on your distribution.  
• Plus, the IRS will consider your payout an early distribution, meaning you could owe a 10% early withdrawal penalty on top of combined federal, state, and local taxes.

When all is said and done, you could end up with a little more than half of your original 401(k) savings!  In addition, you will owe tax annually on any future earnings your lump sum generates.

No, our insurance policies are all term life.

Well i guess that IRA is money I'll never get to tap into.  : ( Although even getting $1000 of it in the end would help.

even borrowing against an IRA is a bad move since the money you would payback is taxed. I would borrow before I would cash out though.

One thought, is it an 401K with employer or an individual IRA? If it is 401K you can cash that out and have 90 days to reinvest and this might give you float time.

Cinnamonhuskies:

Well i guess that IRA is money I'll never get to tap into.  : ( Although even getting $1000 of it in the end would help.

   Well, you will get to eventually, though I realize that's not much comfort now.  

    I'm sorry things are so tough ...  is your DH getting any unemployment benefits yet?