If he is under 59 1/2, then it's right here in your description: "but he is only using $30,000.00 of that for the qualified disaster amount. I am still coming up with a Early Withdrawal penalty on Schedule 2. What I need to do to correct."

You cannot split this into Portions, then expect the early part not being declared as Disaster, to fall under Disaster exclusion.

You realize there is nothing that asks what it got used for? Why are you splitting the $50k at all?