Does cashing out profit shares from former employer affect my EDD benefits?

This is an important question that trips up a lot of people! It depends on how the profit sharing is structured. If it's a qualified retirement plan (like a 401k), then generally cashing it out doesn't affect your UI benefits since it's considered retirement income, not wages. But if it's more like a bonus or non-qualified plan, EDD might consider it income for the week you receive it. When you certify, there's a question about receiving "other income" - this is where you'd report it if needed. Have you checked your plan documents to see exactly what type of profit sharing it is?

I got SCREWED by this exact situation last year!!! I cashed out my profit sharing (around $5K) and reported it because I thought I was supposed to - BIG MISTAKE. EDD counted it as income for that week and I got ZERO benefits that week. Later found out from an EDD rep that I didnt have to report it since it was retirement funds! So mad I lost a week of benefits for no reason. The EDD system is totally broken and DELIBERATELY confusing.

To clarify, retirement account distributions generally don't count as income for UI purposes, but there are some important details to understand: 1. Qualified retirement plans (401k, IRA, etc.) distributions don't count as wages for UI 2. If it's NOT a qualified plan but instead a profit-sharing bonus paid after separation, it could be considered wages 3. Even with qualified plans, if you're receiving PENSION payments (not a lump sum distribution), those CAN reduce your UI benefits The safest approach is to report it when you certify and indicate it's from a qualified retirement plan. This prevents any potential overpayment issues later. If you're unsure, speaking directly with an EDD representative can give you a definitive answer for your specific situation.

Have u tried calling EDD? Thats the onlyt way to get a 100% answer for ur situation. But good luck getting thru lol took me like 3 days of calling nonstop

This isn't legal advice, but I worked in HR for 15 years before my current job. Qualified retirement plans like 401ks are treated differently than regular income. The critical factor is whether your profit sharing was part of a qualified retirement plan or if it was a cash profit sharing program paid as wages. If it's part of your 401k (sounds like it is), then withdrawing those funds is a retirement distribution, not wages. You'll owe taxes and potentially early withdrawal penalties to the IRS, but it shouldn't affect your UI benefits. I suggest downloading the EDD benefit determination guide from their website - search for "retirement payments" in the document and you'll find the specific policy.

just wonderin why u have to cash it out? cant u roll it over to an IRA instead? might save u on the taxes and penalties...

Just following up - were you able to get clarity on this? For anyone finding this thread later, here's the official word: According to the EDD's UI benefit determination guide, distributions from qualified retirement plans (including 401k, IRA, etc.) are NOT considered wages for UI purposes. These distributions should not affect your weekly benefit amount. However, ongoing pension payments (not one-time distributions) might reduce your benefits, depending on whether your base period employer contributed to that pension. The safest approach is always to report and let EDD make the determination rather than risk an overpayment situation.

Great to hear you got confirmation from EDD! This is such a common source of confusion for people dealing with layoffs. Your experience perfectly illustrates why it's worth the hassle of getting through to an actual representative when you're unsure - better to get the official word than stress about it or potentially miss out on benefits you're entitled to. Thanks for following up with the resolution - this thread will definitely help others in similar situations!