59 1/2 is when the penalty no longer applies... taxes will always apply. In some cases if you are over 55 1/2 nd terminated from service at that employer, the penalty no longer applies. Most plans allow for a rollover to a private IRA.. or monthly withdrawals--- with the IRA you have more freedom in investment choices... the employers plan must offer a variety of types of investment, but the specific choice is up to the employer. As with any retirement plan, the best source of information is the employer, as each plan has a specific document that tell you what is allowed. Not all plans offer monthly distribution... check with them to see, if not and that is what you wish rollover my be your best option.

Withdrawals after the age of 59-1/2 are not usually subject to the 10% additional penalty. If the plan was started in the last 5 years, a withdrawal may be hit with the penalty depending on the situation.

However, one is able to borrow from a 401k plan without incurring such penalties. With an IRA, a withdrawal prior to age 59-1/2 that is used for certain purchases would not be subject to the penalty. Usually this is done for a first-time home purchase, or higher education expenses.

The age is 59.5, but whether you can really withdraw funds at this age depends on your plan.

Not all plans have to allow you to take a distribution at age 59.5. That is optional, though most plans do allow it. To determine if this will be or is an option for you, check your plan's summary plan description. This is a document that you should have as a participant. If not, check your plan's website. If it's not there either, ask you plan administrator or plan record keeper.