Do I have to spend down one half of my IRA when my wife goes into a nursing home to get Medicade?

You need to consult the state agency who administers Medi-cal for the answer to your question.

One half of all of the assets you and/or your wife own can be retained by you (up to a maximum), one half will have to be spent. So, yes, this includes your IRA. This one-half spend-down doesn't go asset by asset, it's just on the total, so if you have other funds you can spend and preserve the IRA, you can. If you do spend out of the IRA, make sure you have tax withheld, both federal and state; you don't want to complete your spend-down and then run into a tax liability. Medicaid planning and the spend-down is complicated, and you don't necessarily get complete and ideal advice from Senior Services.

There are other alternatives, but this is not something you should attempt to deal with on your own. The area of law is immensely complex and is a legal minefield.

You need to talk with your local Medicaid administrators. Part of me would say that since it is your 401k, it should not apply, but I don't know how your state handles that. After you talk with them, find a local attorney who handles elder law issues and see what can be done.