If you had left the money in a workplace plan (401k or 403b or certain others) you would be exempt from the penalty if you separated from service in the year you turned 55 (or older).
Because you rolled the money into an IRA, the age limit is 59-1/2 (IRAs have different rules from workplace plans.). To be exempt from the penalty for IRA withdrawals, you must be "totally and permanently disabled." For IRS purposes, this means:
For purposes of this section, an individual shall be considered to be disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration.
There are many conditions that would be a recognized medical disability, but which do not prevent a person from engaging in substantial gainful activity. (A blind person or recent amputee might be "disabled" for some medical definitions, but may be able to engage in "substantial gainful activity", depending on their education and training.)
If you claim the disability exception to the penalty, you must be able to provide proof including a doctor's certification, if asked. (Don't include proof when you file, but have it available.)
