Expert: Shirley McAllister, CPP, PHR - 7/29/2010

Question
QUESTION: My wife and I are both getting laid off and I would like to use my 401K money to pay off some bills even though I know it's not recommended.
If open a claim and then try to do it, it will be considered an "income" and could potentially affect my UE benefits.
What if I take out my 401K money after I am laid off, but BEFORE I open my claim?
Basically, what I want to know is the best way to do this with the least amount of drawbacks. We both live and work in Massachusetts.
Thanks!!

ANSWER: It is income and UI will count it as such doesn't matter if you do it before or after you open a claim.  You will also have 25% Federal withheld as well as a penalty for early withdrawal and probably a state income tax withheld.

Shirley

---------- FOLLOW-UP ----------

QUESTION: I understand they will count it as income. But I have heard stories of people not getting their checks for a certain amount of time if they withdrew it after their claim was open.
I want to make sure that it will not stop me from getting my UE checks (or less money in them) after I do open my claim.
Thanks so much for the quick reply earlier. :)

Answer
The quarter is what counts. If you have too much earnings in a quarter you will not draw UI for the remainder of that quarter. You would more than likely be able to draw in the following quarter. This is not really something I could tell you because the UI system is state run and it is different in every state. You need to contact your Department of Employment to find out what the rules are in your state. I only know the rules for the State of Idaho where I am located.

Shirley