I noticed in the Special Tax Notice that the 10% penalty is not required for medical expensed in excess of 7 1/2%. Are there any other times when the 10% doesn't apply?

In addition to the one reason you already mentioned, there are a couple of others:

* Participant is completely disabled.
* Court has ordered that the funds go to a former spouse or dependent -- order must be in the form of a QDRO.
* Participant dies and money goes to beneficary.
* Participant is at least 55 years of age and terminates employment with the plan sponsor.
* Participant elects a section 72(t) distribution.

note: the age 55 and terminates means the participant turns age 55 anytime during the year he terminates. thus he could actually term at age 54 as long as he turns 55 during the calendar year. see Notice 87-13, A-20

Also, distributions used to correct failed tests or limits (ADP/ACP/MUT, 402(g), 415) are not subject to the 10% penalty.

And exempt also, are distributions that are a series of substantially equal payments made over the life or life expectancy of the participant, or part. and beneficiary.

But to clarify from the original question, the only one of the safe harbor reasons for a hardship withdrawal that could qualify for an exemption from the 10% excise tax on early distributions would be medical expenses in excess of 7&1/2% of AGI.