The 10% Penalty exception for Distributions applies to employees who terminate employment during or after that year in which they turn age 55. I get that.
But what happens when the PLAN terminates? Do those who are age 55 get an exception? And what date to use – plan term eff date or plan distribution date?

That exception applies only if the individual terminates employment, so it does not apply simply if the plan terminates and the individual continues in employment.

Thanks for your reply.