401K VS IRA question...

I would suggest finding a financial adviser to help you with these questions. This stuff can get complicated and a good one can help you plan for retirement at 55. S/he could look at everything - savings, regular IRA, Roth IRA, 401K, pensions, social security, tax implications, etc.

The plan document has to allow it, and many do not. iIf you are not directly rolling over to another IRA or plan, you will still get hit with the 20% in back-up withholding. (from someone who's worked in industry for 18 years.) You will want to speak to your plan administrator and ask for a copy of your Summary Plan Description.

From the IRS document (which I plan to confirm with our financial planner):

Additional exceptions for qualified retirement plans. The tax does not apply to distributions that are: From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees)

Example. George separated from service from his employer at age 49. In the year he reached age 55 he took a distribution from his retirement plan. Because he separated from service before he reached age 55, he did not meet the requirements for the exception for a distribution made from a qualified retirement plan (other than an IRA)
after separating from service in or after reaching age 55 (age 50 for qualified public safety employees).

You do have to be 55 when you separate from service.  Make sure you are going by the advice of a financial adviser.   

In some cases, it depends on what you need to fund and what options are available to you. For example, an HSA account can be used for COBRA insurance premiums. So, if you expect to need to take out COBRA for the time limit COBRA is allowed, and if you have an HSA option, you can put money there tax free and withdraw when paying COBRA premiums. An HSA cannot be used for regular insurance premiums though. I think there are some medicare related premiums that it can be used for but you are looking for money at 55, not 65. If you will already have insurance through a retirement plan with a company and won't need to pay premiums or at least don't need COBRA, you can use the HSA money for its intended use.......medical expenses not covered by insurance.

You can always invest in Mutual Funds. Your capital gains are taxable in the year that you receive them which means you will pay taxes on money that might be reinvested in the account and didn't really come to you. You need to be prepared for these at tax time. It makes it harder to estimate you Federal Tax bill because you don't have control of what the fund manager does with buying and selling and dividends from investments in the Mutual Fund could be paid on stocks that the fund holds. You can set up an account with any of the companies......Fidelity, Vanguard, etc. etc. and invest all you want.

Then you should go to the meetings. I meet with mine both separately (working on my investments in the IRA that I converted from several 401ks and my Roth IRA that I contribute annually to) and with my DH. I think it's important to get an over all plan together.