Hi,
I am over 55 and left my job this past year to start up a new business where I am not taking any salary. My question is whether I qualify for a penalty free withdrawal from my 401K at my former employer?

Yes you do qualify for a penaly-free withdrawal - as long as you have separated from service in or after the year you turned 55. Since you left your job last year, and you are now over 55 I assume that last year you were at least 55. You will have to pay regular income tax on the withdrawals, of course.

Agree!