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  1. #1
    samjohnson is offline Junior Member
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    401 k and unemployment

    What is the name of your state (only U.S. law)? WI

    my husband has been unemployed for some time and we were getting behind so he asked the wi unemployment office if could cash out his 401 k and if it would affect his unemployment.
    the guy he talked to said it would not and that he just would not claim any unemployment for that week when he received his money, and that he could refile the next week. Now they are saying that he should have called before he cashed out now they are investigating the matter and say he can collect until it is resolved.
    I am afriad that they will make us pay back the money now.
    How does 401 k affect his unemployment in WI, i cant seem to get a striaght answer out of anyone there.

    Thanks
  2. #2
    pattytx is offline Senior Member
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    It shouldn't at all, because it isn't earnings from work performed.

    Commentator?
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  3. #3
    commentator is offline Senior Member
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    Well, for heaven's sake, he should certainly keep filing for weeks of benefits, though his benefits may have been stopped. It sounds like he talked to a complete idiot! Not because it DID affect his benefits, but because it should not have affected his benefits even for one little week!

    A 401K cash out is not related to unemployment, because he certainly did not make this as wages, it is NOT a severance, and it is irrelevant what one's income is, even for one week when one is receiving unemployment! He shouldn't have asked, it even sounds as though he got somebody confused at the unemployment office, but he needs to definitely get it straightened out, get back pay for each week.

    He should persist. A 401K withdrawal should have no more bearing on his unemployment than if he inherited money or won the lottery, and as long as he was eligible for unemployment based on his availability for work, he didn't need to report it at all.
  4. #4
    pattytx is offline Senior Member
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    That's what I thought, Commentator, thanks.
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  5. #5
    Betty is offline Senior Member
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    Receiving a pension/401(k) and unemployment insurance benefits

    A pension or monies received from a 401(k) based on work for an employer who is in your base period (potentially responsible for your unemployment benefits) may affect your benefits. This issue will be referred to an adjudicator for a complete investigation. If the employer you are receiving a pension from is not in your base period, it will have no impact on your claim.

    [url=http://fileunemployment.org/wisconsin-unemployment]Wisconsin Unemployment Claims ? Reference Guide | File Unemployment[/url]
  6. #6
    commentator is offline Senior Member
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    Keyword here is received---as in monthly disbursements, in a pension or a 401K, when the person has reached the age where it can come out in monthly disbursements as according to the original plan, and they have elected to do so, and the payer of the pension is one of the base period employers whose wages were used to set up the claim. In these cases, the unemployment may be reduced weekly based on the monthly amount received in the pension, and eventually, if it's too much, there would be no unemployment at all.

    But cashing your 401K out to live on while you are unemployed does NOT affect your unemployment, any more than rolling it over into another 401K program doesn't. Whoever these people talked to at first should have been able to tell the claimant the difference if they had any expertise on unemployment law whatsoever.

    But once the claimant answered "Yes" to the question about did you receive any pension or retirement money this week, they will do a fact finding, stop the claim and have an ajudicator review it. Then after their determination, in this case, they should pay the person for these weeks and continue paying right on schedule.
    Last edited by commentator; 03-07-2010 at 08:31 AM.
  7. #7
    Betty is offline Senior Member
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    Agree, that's what the article is trying to say I believe & what I was trying to say - *that an investigation is done* as in the OP's situation. It's not that in all cases UI benefits are affected.

    Thanks, commentator.

    Betty

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