Unfortunately, the hardship allows you to take the withdrawal from your 401k, but it does not exempt you from the penalty for early withdrawal. Under the SECURE 2.0 Act (which is fully active in 2026), there is a specific exception for "Emergency Personal Expenses", but you can only exempt up to $1,000 from the 10% penalty once per year for "unforeseeable or immediate financial needs." You can indicate this in TurboTax for partial exemption.
You would have to qualify for another exception for full exemption. See 401(k) Early Withdrawal: Understanding the Consequences.
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