The key for the withdrawl penalty as to age is 59 1/2. If retirement withdrawals occur before that age, then the penalty could be applicable.
But even if you are younger than 59 1/2, there is an IRS exception to the penalty if the distribution is after separation from service and the distributions are in a series of equal payments over the life of the participant. The IRS has a very good publication that can help with this detail called Publication 590, Individual Retirement Arrangements that discuss these options.