NYS Department of Labor - can I withdraw money from my 401k while collecting unemployment benefits?
I've been on unemployment for about 6 weeks now and my savings are running low. I'm wondering if I can take money out of my 401k without it affecting my NYS Department of Labor benefits? I have about $15,000 in there from my last job and could really use some of it to cover rent and bills while I'm job searching. Will the NYS Department of Labor consider this as income that would reduce or stop my weekly unemployment payments? I don't want to mess up my claim status.
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Jamal Harris
401k withdrawals are generally not considered earned income for unemployment purposes by NYS Department of Labor. However, you should be aware that early withdrawals (before age 59.5) will trigger a 10% federal penalty plus regular income taxes. The withdrawal itself shouldn't affect your weekly UI benefits since it's not wages from employment. Just make sure you continue to meet all other requirements like job search activities and weekly claim certifications.
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Zoe Stavros
AuthorThank you! That's a relief. I was worried it would count as income and mess up my benefits. The tax penalty hurts but I need the money now.
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GalaxyGlider
wait doesnt any money you get count as income?? i thought unemployment made you report everything
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Mei Wong
No, 401k withdrawals are your own money that you already paid into, not earned income. NYS Department of Labor only cares about wages, freelance income, pension payments - stuff like that. Withdrawing from retirement accounts is different.
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Liam Sullivan
I went through this same situation last year when I was on unemployment. Had to tap my 401k to avoid losing my apartment. NYS Department of Labor never asked about it and it didn't affect my weekly payments at all. Just be prepared for the tax hit next year - that 10% penalty plus regular taxes really adds up. I ended up owing like $3,000 extra when I filed my return.
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Zoe Stavros
AuthorUgh the taxes are going to hurt but I don't really have a choice right now. Did you have any trouble reaching NYS Department of Labor when you had questions about what counts as income?
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Liam Sullivan
Oh god yes, calling NYS Department of Labor was a nightmare. Spent hours on hold just to get disconnected. Someone on here told me about this service called Claimyr that helps you get through to actual agents. Check out claimyr.com - they have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Saved me so much frustration.
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Amara Okafor
The system is so messed up that people have to raid their retirement just to survive while waiting for benefits that should be automatic. Sorry you're going through this but yes you should be fine withdrawing from your 401k without affecting your UI claim status.
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Giovanni Colombo
just took money out of mine too, no problems with my weekly claims
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Chloe Robinson
I'm in a similar situation right now and really appreciate everyone sharing their experiences. Can anyone confirm if there's a difference between taking a loan from your 401k versus doing a hardship withdrawal when it comes to NYS Department of Labor reporting? I've heard 401k loans might be better since you're technically paying yourself back, but I want to make sure before I make any moves that could jeopardize my unemployment benefits.
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