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Lump Sum Severance and unemployment

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kittykitty

Junior Member
What is the name of your state (only U.S. law)? Connecticut

If I receive a lump sum payout of 16 weeks pay upon termination, will my unemployment be deferred by 16 weeks?
 


commentator

Senior Member
It sounds as though you have not been laid off yet, but you are trying to plan ahead. Each state has quite specific rules regarding severance, wages in lieu of notice, etc. Some count everything as income, some do not reduce your claim for some, but do reduce or postpone benefits for the others. Generally, monthly pensions will always affect your unemployment, but not 401K roll overs or take outs.

I do not give CT's u.i. websites a very good grade for usability, but I can tell you that you should always FILE for benefits as soon as you are laid off, even though you will be receiving severance in a lump sum package and may not NEED the money from unemployment for a while. You cannot save your unemployment benefits up by waiting to file. In fact, they will go away if you do not file for them as soon as you are laid off, and it is always important to file your claim the first week you are eligible to do so, even though you get a severance package.

Do not make the mistake that many do, of living on the severance, waiting until they are SURE they cannot find another job immediately or until they are financially desperate enough to need unemployment to survive. Unemployment benefits are not welfare, they do not fall into the category of welfare or a hand out, as they are not "needs based" which means your income is not a criteria to receive these benefits. They are insurance against losing your job through no fault of your own, paid for by the employers of the state.

If severance is counted in your state as income, your claim will be postponed, but if you have filed it immediately, it will all be in place as it should be where you are ready to begin receiving weekly benefits. If you do not have to count severance as wages (which is what I honestly suspect, having looked at the website) then you will begin your unemployment benefits at once. (You will, of course, have reported the severance when you filed your claim. Most separation notices require this information to be on the paperwork anyhow.)
 

kittykitty

Junior Member
Thank you for replying. I also did not find the Connecticut Dept. of Labor website very user friendly. What did you read that makes you think they may not count the severance as wages--I couldn't find it. Thank you.
 

commentator

Senior Member
Because they kept mentioning that pensions are countable...that "some" payments are countable....it's just a guess on my part based on the way their information is worded that in CT, severance does not count as wages, does not affect your claim, but wages received in lieu of notice does. Any live person you talked to at the Department of Labor/unemployment office in Connecticut could tell you in a heartbeat what the state's policy is, but why do you so desperately need to know? You're going to file immediately when laid off anyhow, and you'll be told the answer then.
 

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