I was 58 when I was separated from my last employer. I have not found a job and kept up my Cobra to cover a hip replacement. I had to use the money to cover my living expenses and co-pays. Will I have to pay the penalty on top of the other taxes?

Yes. Early withdrawal penalty in addition to the income tax on the amount of money you received.

According to IRS Publication 590, if you are over 55, lose your job and take money from your IRA to help cover your living costs then you have to pay taxes on the money you withdraw but there is no penalty.

I will agree with Lisa, no you should not, did they with hold the 10 percent when you withdrew the funds?

Another vote for no penalty - since you were 55 or older when you were separated from service. They should have withheld 20% from your withdrawals for federal income tax - of course the actual amount you will owe in income tax can't be determined until you file your taxes next year. Also, if you live in a state that has income tax you will have to pay that as well.