client was out of work for four weeks and collected unemployment of about $3000, he took out $95,000 from his 401(k), that was clearly not all used for hardship. He did qualify for the early withdrawal penalty to be waived because he was furloughed, but can I waive the entire $9500 penalty.  He clearly only lost about $3000 of income during the time he was off. I cannot find anything on the IRS website other than it says you can waive the penalty on up to $100,000 of withdrawals . I could not find anything about comparing what wages were lost to the amount a person took out of their 401(k).  can I waive the entire $9500 penalty?