Was the 10% added early retirement tax applied automatically in prior years since my wife had not reached 59 1/2 until this tax year?

[AmyC]

If you receive periodic payments, from a qualified plan, the penalty does not apply to you. If she has been getting this money for years, it sounds like regular payments. Early retirees are not subject to a penalty.

Review your answers and check prior returns.

See the rules at About Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts or read the English interpretation by TurboTax at 5329 article.