Zoe, the exception I believe you are replying to is referred to as the
72(t) regulations. Regulation 72(t) allows for "substantially equal periodic payments" before age 59 1/2 that do not incur the 10% applied to premature distributions.
The guidelines for calculating 72(t) payments are based on mortality tables, the interest rate, and one of three methods to calculate the allowable distribution. Life expectancy, annuitization, or amortization are the three methods allowed for calculating distributions.
Here's the important part, you MUST continue to make these substantially equal and periodic payments for the longer of 5 years or until you reach age 59 1/2. If you fail to make a distribution you will be subject to the 10% penalty. Also you essentially "lock-up" your money. In an emergency, you cannot take a lump sum distribution without incurring the 10% penalty on ALL of the other money you prematurely distributed as well as the lump sum. Furthermore, once calculated and implimented you can only change the distribution amount once. All distributions are be taxed as ordinary income.
The rules for 72(t) are many and the IRS seems to be constantly modifying them. I would consult with a professional (or a VERY skilled
401(k) plan administrator) before going forward.
Good luck.