Short answer: a withdrawal you make after separation, if the separation occurs in (or after) the year you turn 55 (even if the separation and withdrawal are before your 55th birthday).
Details:
The IRS says,
"the employee separates from service during or after the year the employee reaches age 55"
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...
However, the law (code) says,
"made to an employee after separation from service after attainment of age 55,"
https://www.law.cornell.edu/uscode/text/26/72
and the instructions for form 5329 say,
"Qualified retirement plan distributions (doesn’t apply to IRAs) you received after separation from service when the separation from service occurs in or after the year you reach age 55."
To break this down, the law seems to say that you must separate from service after turning 55 (your 55th birthday) and the withdrawal must occur after your separation. However, the IRS instructions and forms say the exception will apply if you make the withdrawal after separation, as long as the separation occurs in the year you turn 55. In other words, if your birthday is December 1, 1970, and you separate from the company on July 1, 2025, any withdrawal you make after July 1 is qualified for the exemption, even though you are age 54 at the time.
This is probably due to the fact that the IRS runs almost everything on a calendar year basis, and the 1099-R from the 401k provider does not actually specify the exact date of the withdrawal and whether or not it was before or after your birthday.
