There is an exception to the 10% early distribution penalty when a plan participant separates from service in an employer plan the year they turn age 55. The age for this exception drops to age 50 for certain Federal, state and local public safety employees.
But, as you know, you still owe regular income taxes. Since nothing was withheld, it's possible you are getting hit with underpayment of estimated tax penalties and interest. (Which are different than the 10% discussed above.) Going forward, you might want to start having taxes withheld.
