The punch in t'ai chi is performed with a soft fist. It is worth spending time to understand the correct way to form the fist.
When the hand is open and stretched out the ch'i is able to extend out beyond the finger tips. When the hand is curled this flow is then fed back into the arm. The arm itself then forms a block of chi. In this way heat is also prevented from leaving the body on a cold day. From a tai chi point of view the arm is sealed and the fist itself is able to function as an abrupt ending to the arm. The hand is soft and the accumulation of substantial force makes the hand similar to a peice of clay.
It is important that the thumb is not inside the fingers against the palm. The thumb is on the outside of the fingers. The softest method is with the thumb on top of the hand, resting on the index finger. There is more tension in the hand when the thumb bends accross the first and second fingers.
When the thumb is touching the base of the ring finger and the fingers closed over, it prevents loss of ch'i but it is never used in the martial context. You will see a very young child naturally use this fist when they defecate. It is advised by some chi kung masters to avoid loss of ch'i even as an adult!
Finally remember that the t'ai chi force must leave the fist and therefore when using the mind intent it is not directed into the fist but beyond it.