In March 2011 I converted a traditional IRA to a Roth. It is currently worth less than the amount converted. I am planning to take the money out in February 2016 and close the account. Am I correct that there will be no penalty even though I am not 59 1/2 yet?

No, incorrect; In order to withdraw your earnings from the R- IRA tax and penalty free, not only must you be over 59 ½ years-old but your initial contributions must also have been made to your R- IRA five years before the date when you start withdrawing funds