If you withdrew the funds, the funds would no longer be protected.
The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.
Not protected if withdrawn, but nothing to protect if it gets spent on necessities. On the other hand, you are facing some potential tax penalties if you withdraw. It is time for you to speak with a bankruptcy attorney before you do anything else.
It is no longer exempt.
However, you may be able to exempt it using the "wildcard" exemption under CA law CCP section 703.140(b)(5), which allows an general exemption of $23,250.
You should file BK first and then withdraw the IRA funds.
You should probably seek a BK attorney about what you are attempting to do.
I have an office in Laguna Hills if you are interested and practice BK.