Is the penalty applied before any month you turn 591/2 even though you turn 591/2 during the tax year? As an example I tune 591/2 in Jun of 2008, Does that mean any payments made to me before June 08 are penalized even though I turn 591/2 in the tax year?

Basically is it the month or the year you turn 591/2?

I believe it's the month (and day) of your age 59 1/2 that determines if there is penalty imposed by the IRS. Personally, I would not want a check in my hands dated one day before my age 59 1/2. After that day, I believe there is no penalty but ck with the IRS by calling them or better read the IRS publication or have your CPA give you an answer.