04 Jan Will my 401(k) withdrawal hurt my unemployment eligibility?

Q. I had to withdraw $6,000 from my 401(k) and Roth IRA. Will I still be eligible for unemployment checks?
— Out of work

A. We’re sorry to hear about your financial situation.

Under the CARES Act, people were permitted to take money from a retirement plan — known as a coronavirus-related withdrawal.

These withdrawals could avoid the normal 10% penalty assessed on withdrawals before age 59 ½, said Jody D’Agostini, a certified financial planner with Equitable Advisors/The Falcon Financial Group in Morristown.

Another benefit, she said, is that you can have up to three years to pay the taxes on this withdrawal, or you can return the money to your 401(k) or IRA within that time and recover any taxes paid.

Now to your unemployment benefits.

“Unemployment benefits are not need-based so this should not disqualify you from unemployment benefits,” she said. “The money that you withdrew from your 401(k) or IRA would not affect your unemployment checks.”

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This story was originally published on Jan. 4, 2021.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.