Right. First of all, Any 401K and IRA distributions are separate from the gifts. What you did with the money doesn't matter or figure into it. You owe tax on the withdrawal and a 10% Early Withdrawal Penalty if you are under 59 1/2.
Then for the gifts, your wife and you both can give each of them up to the max without filing the gift tax return 709. So that doubles it even more.
She can give 16,000 to each of them and so can you. 16,000 x 4 = 64,000.
