You can avoid the penalty if you use the money to pay for college, a first home purchase (up to $ 10,000), significant medical expenses, health
insurance after a layoff or expenses associated with a disability.
Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical bills, notice of job
layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower's inability to resolve the problems that resulted from the event such as a copy of
insurance papers or claim settlements, listing agreements, lease agreements, tax returns (e.g. covering the periods prior to, during, and
after a loss of employment).