I AM TOTALLY LOST AT THIS. HELP!!
I am 52 and currently collecting SSDI benefit (permanent disability) and would like to do 401K early hardship withdraw to save my principle residence (I am on limited income, and have 2 mortgage loans). All of the website that I have looked at was advising me to contact the employer/HR, but in my case, there's no employer/HR for to contact to obtain authorization/approval for early withdraw. Would anyone please tell me: 1) Whom should I contact to obtain the authorization to waive the penalty, 2) What is the process for someone in my situation. Thank you for all your help.

You should first roll the entire 401K into a rollover IRA.

Once the rollover is complete, you can then make the needed withdrawal and NOT pay the 10% Early Withdrawal Penalty because you are permanently and totally disabled (exception noted on page 127 of the 2012 IRS Pub 17).

To do as ATE advised you have to contact the plan administrator. If you are no longer employed by the company that sponsored the 401(k), you contact the plan administrator which should be listed in the statements you receive.

Scott makes a good point.

I think you are confusing terms - or perhaps we are misreading your question. You mention "harsdship withdrawal" in the subject of your post, but that term only applies to active employees. It seems that you are no longer employed, at least not at the company where you have the 401(k) account, in which case you can take the withdrawal without actually rolling the 401(k) to an IRA first. This is because just like with IRAs there is an exception to the 10% early withdrawal penalty from a 401(k) for the case of "total and permanent disability."

I second Scott's suggestion - first thing is to call the 401(k) plan administrator and ask what proof you would need to provide them so that the "reason code" for the distribution that they will ultimately provide on your 1099-R indicates disability. If they balk at this, you can still take the withdrawal and when you file your 2013 taxes next year you can include form 5329 to document that you are exempt from the penalty.

As I said earlier all this assumes that you are no longer employed.

Regarding 401K withdraw. I am collecting SSDI benefit due to my permanent physical disability (lost use of my left side). If I withdraw my 401K (I am 52 yrs old), would I have to pay tax & penalty? Thank you.

Regarding taxes - yes, all distributions from a 401(k) are taxable as ordinary income for federal income tax purposes. You may also have state and/or local income taxes to pay, depending on where you live.

Regarding penalty - no, as long as you have proof of "total and permanent disability."

As already mentioned - when you contact the plan administrator see what they have to say about documenting the withdrawal as being due to disability on the 1099-R form that they will issue you next January.

I just want to mention that many people think they are on total and permanent SSDI when they are really on total only. You can be on total only the rest of your life, and many are, but the difference is there. Loss of use of one side of the body does sound permanent, but I wonder if this might be the basis for any confusion.
(I don't know about the details of this in regard to 401Ks.)

Point taken, Joy!