The claim for a hardship exception to avoid an early withdrawal penalty is made to the IRS on your tax form, or by way of some other IRS scheduled form which you attach to your return. The 401K plan administrator is simply filing the obligatory form notifying the IRS of the early withdrawal. They do not make decisions regarding tax penalties or the legitimacy of any hardship exception claimed. You simply claim the exception in the manner the IRS provides, and file your returns without paying the early withdrawal penalty. If the IRS decides to question the hardship claim you make, then it will send you notification after you file your return, and may request additional documentation or other supporting evidence to justify the exception. If they do not contact you, then your claimed exemption is accepted. You may wish to have your tax returns prepared by a tax professional or accountant if you are uncertain how to properly claim the hardship exemption.