If a participant is 55+ I understand they can avoid the 10% penalty. However, would they be subject tot he annualized equal installments?

Not so fast. The participant would have to terminate in or after the year of the 55th birthday to be eligible for the exception. If termination is at age 53, the exception is not available even if the participant waits until age 55 to start distributions.

If eligible, thats it. Nothing more is necessary to avoid the penalty tax. But the exception does not work under IRAs, so don't roll over a distrbution and then expect to get penalty-free money out of the IRA without qualifying under another exception.

Click on the link below:

http://www.benefitslink.com/articles/feeds...990022454.shtml

This is a good article that one must read regarding "Retiring at 55".