This really makes no sense to do unless it's part of a court ordered QDRO of a divorce settlement, then there are no penalties. Otherwise you'll pay that 10% penalty for early withdrawal and the income/contribution would wash.

Thank you for the quick response. Going one step further, is it at all possible to actually transfer funds from a husbands 401k or IRA account, to that of his spouse, other then through a divorce or death?

No, not that I'm aware of.

401(k) and IRA are individual accounts. The funds cannot co-mingle while pre-tax.
You can always take a distribution from your IRA, pay the required taxes, and use the money to contribute to your spouse's IRA (if she's eligible to make a contribution). Then, if your family income permits, she might take an adjustment for the contribution on the return ...
You would be subject to an early withdrawal penalty if you aren't over age 59 1/2.
The trick here would be that the events are separate, tax-wise. You take a distribution, pay any tax or penalties. Then your wife must meet the requirements to make a contribution and determine its deductibility. The IRS wouldn't know or care if it was the same funds involved.