"He still has some of the $20,000 in savings and used some for a celebration vacation"

The IRS does not care. That's the point. $100,000 is the limit for disaster treatment. Over this would be the reportable taxable early Partial. Your taxpayer doesn't have this condition.

Stop considering where the money Went. Work on Getting the money, first. That's the point of the tax form 8915-E. Read it:

https://www.irs.gov/pub/irs-pdf/i8915e.pdf

"Coronavirus-related distributions. A coronavirus-related distribution is a retirement plan distribution that was made:

1.In 2020 before December 31, 2020; and

2.To a qualified individual. See Qualified individuals next for details.

If (1) and (2) apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a coronavirus-related distribution, regardless of why the distribution was made. Coronavirus-related distributions are permitted without regard to your need."