I will be leaving my employer at the end of the month. I intend to roll over my 401k account to an IRA. If I wished to keep what funds I have contributed this year, do the penalties still apply?

There are no penalties if you roll it over to an IRA. If you mean that you want the cash back for what you've contributed this year, then yes, you'll owe both the penalty and the tax.

RickJ's advice is accurate!