Reporting 401k withdrawal while on EDD - will it affect all my weekly benefits?
I'm in a bit of a financial bind and decided to withdraw about $5,000 from my 401k last week. I've been collecting unemployment for about 2 months now following a layoff from my construction job. I know I need to report this income when I certify, but I'm confused about how it affects my benefits. Will this 401k withdrawal only reduce/eliminate my benefits for the week I report it, or will it somehow affect my entire claim and all future payments? I really need to keep my weekly benefits coming after this one-time withdrawal. Has anyone dealt with this situation before? Really stressing about this!
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Finley Garrett
When you report the 401k withdrawal, it only affects the week you received the money. EDD considers this income for that specific week only. Make sure you report it accurately on your certification for that week. Your future weekly payments should continue normally after that, assuming you meet all other eligibility requirements. Just be aware that you'll likely owe taxes on that withdrawal next year - both federal income tax and possibly a 10% early withdrawal penalty.
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Cass Green
AuthorThank you SO much! That's a huge relief. I was worried my entire claim would be affected moving forward. So I just need to take the hit for one week basically. I'm aware of the tax implications unfortunately, but had no choice with my rent coming due.
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Madison Tipne
wait i thought 401k doesnt count as income for EDD? its your own money that you already earned before. anyone else know for sure?
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Holly Lascelles
That's not correct. Per EDD guidelines, 401k withdrawals are considered income during the week received and must be reported when certifying. Pensions are different from 401k distributions in how they affect claims. Always report all income to avoid potential overpayment issues later.
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Malia Ponder
I went through EXACTLY this last year!! I had to pull $3800 from my 401k when my car broke down. I reported it when I certified and YES it only affected that one week. I didn't get any unemployment that week because the withdrawal was more than my weekly benefit amount, but then my payments went back to normal the next certification period. Just make sure you report it for the week you actually received the money in your bank account, not when you requested it. And double-check the amount matches what you actually received (after any taxes withheld).
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Cass Green
AuthorThat's super helpful to hear from someone who's been through it! Do you remember if you had to provide any documentation to EDD about the withdrawal? Or did you just enter the amount when certifying?
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Malia Ponder
I just entered it when certifying - they never asked for documentation. But I did keep my 401k withdrawal statement just in case they ever questioned it. Better safe than sorry!
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Kyle Wallace
BEWARE!! When I did this EDD stopped all my payments for 5 weeks for "eligibility review" after I reported my 401k withdrawal!! They eventually paid me but it was a NIGHTMARE trying to get through to someone. The system is broken!!!!
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Ryder Ross
Same thing happened to my brother! He had to keep calling EDD for DAYS to get it sorted out. The whole system is set up to make things as complicated as possible. They freeze everything at the slightest issue.
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Gianni Serpent
If anyone's having trouble getting through to EDD about 401k issues or payment holds, I highly recommend trying Claimyr (claimyr.com). It helped me get through to an agent in under 25 minutes after days of failed calls. They have a good demo video explaining how it works: https://youtu.be/JmuwXR7HA10?si=TSwYbu_GOwYzt9km - totally worth it when you're dealing with payment interruptions and need to speak to someone ASAP.
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Holly Lascelles
To clarify a few points about 401k withdrawals and EDD: 1. Report the withdrawal for the specific week you RECEIVED the funds (not when you requested it) 2. It only affects the benefit week in which you report it 3. If the withdrawal amount exceeds your weekly benefit amount, you'll receive $0 for that week 4. This doesn't impact your claim balance or future weeks 5. It counts as a "paid" week toward your total claim even if you receive $0 6. Keep documentation of the withdrawal amount and date received If your certification gets flagged for review after reporting the withdrawal (which sometimes happens), be prepared to verify the information by phone or through your UI Online account.
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Cass Green
AuthorThis is SUPER clear and helpful, thank you! I'll definitely keep documentation ready in case they need it. I've been certifying regularly without any issues so far, so hopefully this will just be a one-week blip.
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Henry Delgado
I think it depends on how much you took out actually. My cousin took out like $30k from his 401k last year during unemployment and they made him ineligible for like a month because they said it showed he didn't need unemployment or something? Not sure if that's normal tho
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Finley Garrett
That's not standard procedure and sounds like there may have been other factors involved. The amount itself shouldn't trigger ineligibility - the EDD is concerned with weekly income, not overall financial status. However, a large withdrawal might trigger additional review to ensure there wasn't unreported work or other eligibility issues.
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Cass Green
Update: I reported my 401k withdrawal on this week's certification and checked my UI Online account this morning. It shows $0 payment for this week (as expected) but my claim is still active and everything looks normal otherwise. Looks like it's just affecting this one week! Thanks everyone for the advice and sharing your experiences - really helped calm my anxiety about this whole situation.
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Malia Ponder
Glad it worked out! That's exactly what happened with mine too.
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LilMama23
Great to see this worked out for you! Your experience is really helpful for others who might be in similar situations. It's always nerve-wracking when you have to report something that affects your benefits, but you handled it exactly right. Thanks for following up with the community - these real-world updates are so valuable for people who are stressing about the same thing. Hope your financial situation improves soon!
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Daniela Martinez
Hello, I am currently receiving unemployment benefits and have about 2 months left worth for my claim. Unfortunately, I had to cashed out my 401a this week due to unforseen emergencies. Will this only affect the current week that I am certifying for or it would completely disqualified me from unemployment benefits? Thank you for the help in advance!
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