There is no penalty after 59 1/2, however if you are still employed, you may not be able to withdraw it. The majority of plans allow for distributions of all VESTED funds in an in service withdrawal over age 59 1/2. Some plans require you have worked there a certain number of years. Others only allow for what YOU have personally put in to be withdrawn, not earnings or employer contributions Some do not allow for inservice withdrawals at all.. each plan is different, with options chosen by the employer/ sponsor.. the plan document will lay out all the rules - the administrator can answer that part of the quesstion... but the penalty YES -- no longer applies to you

Age 59.5 is the age at which you no longer will pay the 10% penalty when you file your taxes if you have taken a distribution from a plan. So, yes, if you take a distribution from the plan after this age you will only pay taxes but no penalty.

As for whether you can withdraw, that depends on your plan. A plan does not have to allow you to take a distribution at this age. Check with your plan sponsor or read you Summary Plan Description to see what the rules are for your plan. It is common for distribution to be allowed only at retirement, death or disability, but some plans will allow distribution at age 59.5.