Is my untouched 401k considered income for PA UC benefits while filing 2023 taxes?

No worries - your 401k that you haven't touched won't affect your PA UC benefits at all. I went through this exact situation last year. As long as you haven't withdrawn any money from it, it's not considered income for unemployment purposes. Only actual distributions (money you take out) would count as income. You're good to leave it where it is until you decide what to do with it in April 2025. BTW, if you're having trouble getting through to UC to confirm this or have other tax questions, I used Claimyr (claimyr.com) to reach an actual person at PA UC after trying for days with busy signals. They have a video showing how it works: https://youtu.be/CEPETxZdo9E?si=WL1ZzVZWG3KiHrg2. Saved me hours of redial frustration!

Not true!! My cousin had a 401k and it DID affect his unemployment!!! UC is tricky about these things so be careful!!

I just went through this with my PA unemployment claim. Your untouched 401k doesn't affect your benefits at all. The 401k only appears on your W-2 to show contributions that were made during your employment, which is totally separate from UC calculations. What WOULD affect your benefits is if you start taking distributions (withdrawing money) from the 401k while on unemployment. Those withdrawals would need to be reported as income on your bi-weekly claims and could reduce your weekly benefit amount depending on how much you take out. Also, when you hit that April 1st decision date, be careful about what you do with the 401k. Rolling it into another qualified retirement account (like an IRA) won't affect your benefits. But cashing it out would be reported as income.

i had this same question! my accountant told me that retirement accounts are only income when u take money out so ur good

Just to add some technical clarification: According to PA UC regulations, deferred compensation like 401k plans are not considered income for unemployment purposes unless you take a distribution. The contributions shown on your W-2 were already accounted for in your base year wage calculations when your initial benefit rate was determined. However, there is one scenario to be aware of: if your former employer made any severance payments directly to your 401k when you were laid off, that portion might need special handling on your taxes. It wouldn't affect your UC benefits, but it could impact your tax situation. For your April 2025 decision - you generally have three options: 1. Leave it with former employer (if they allow it) 2. Roll it over to an IRA or new employer's plan (no tax impact) 3. Cash out (will count as income for both taxes and UC, plus penalties if under 59½

@MattistheMan07 - Good point about Roth accounts. Yes, there are different tax implications for Roth 401ks vs traditional 401ks, but for PA UC purposes, the distinction doesn't matter unless you actually withdraw funds. For a traditional 401k, withdrawals are fully taxable and count as income. For a Roth 401k, only the earnings portion of withdrawals might count as income if certain conditions aren't met. But again, if the account is just sitting there untouched, neither type impacts unemployment benefits.

Thank you all sooo much for the help!! This community is amazing. I'm gonna leave my 401k right where it is until April 2025 and then probably just roll it over. One less thing to worry about while dealing with PA unemployment!

Great question! I went through something similar when I was laid off from my manufacturing job last year. Your untouched 401k definitely won't affect your PA UC benefits - I was worried about the same thing and called UC to confirm. Just want to add one thing that helped me: when you do your taxes, make sure you're only reporting actual income you received, not the balance of retirement accounts. The W-2 shows your 401k contributions from when you were working, but that's already been factored into your unemployment calculation. Also, since you mentioned construction work - if you end up finding seasonal work before your April decision date, just remember that any 401k from a new employer would be separate from your current one. Good luck with everything!

Just wanted to chime in as someone who's been through this exact scenario! Your untouched 401k absolutely will not affect your PA UC benefits. I was laid off from my warehouse job in 2022 and had the same concern about my 401k showing up on tax forms. The key thing to remember is that PA unemployment only cares about actual income you receive during your benefit weeks - not money sitting in retirement accounts. Your 401k contributions on your W-2 were from when you were employed, so they're already baked into your base period wages that determined your benefit amount. One tip: when you get to that April 2025 decision point, definitely consider rolling it over to an IRA rather than cashing out. The penalties and taxes on early withdrawal are brutal, plus it would count as income for UC purposes if you're still claiming benefits then. Rolling it over keeps everything clean and tax-free. Stay strong - construction layoffs are tough but you'll get through this!

Hey Liam! Just wanted to add my two cents as someone who dealt with this recently. Your 401k sitting untouched definitely won't impact your PA UC benefits at all - I had the same worry when I got laid off from my retail management job last spring. The confusion about it showing on your W-2 is totally understandable! That's just showing what you contributed while you were working, which already got factored into your base period wages when they calculated your weekly benefit amount. It's not new income that would affect your current claims. One thing I learned that might help: if you're ever unsure about reporting something on your biweekly claims, PA UC has a pretty clear rule - only report money you actually receive during that claim week. Since your 401k is just sitting there growing (hopefully!), there's nothing to report. Good call on planning to roll it over in April rather than cash out. The construction industry can be unpredictable, but at least you don't have to stress about your retirement savings messing with your unemployment benefits!

Hey there! I know this thread is pretty comprehensive already, but I wanted to share my perspective as someone who just went through this exact situation a few months ago. Got laid off from my electrical work in November and had the same 401k worries. Everyone here is absolutely right - your untouched 401k won't affect your PA UC benefits at all. I actually brought all my paperwork to a free tax prep clinic at the library and they confirmed the same thing. The 401k contributions on your W-2 are just showing what was deducted from your paychecks while you were working, not new income. What really helped me was keeping a simple rule in mind: if money didn't actually hit your bank account or come to you as cash/check during a claim week, you don't report it on your biweekly filing. Your 401k balance going up or down with the market isn't money in your pocket. Hope you get back to work soon - the construction and trades are picking up again with the warmer weather coming! In the meantime, at least you can cross this worry off your list.

Just wanted to jump in here as someone who works in HR and deals with unemployment questions pretty regularly. Everyone's absolutely right that your untouched 401k won't affect your PA UC benefits - I've helped several employees through this same concern when they've been laid off. The key distinction is between "assets" (like your 401k balance) and "income" (money you actually receive). PA unemployment only cares about reportable income during your claim weeks, not the value of retirement accounts or other investments you're not touching. Since you mentioned being confused by the tax forms - when you see your 401k info on your W-2, that's showing pre-tax contributions that were already deducted from your wages during the base period they used to calculate your UC benefit rate. It's not additional income to worry about now. You're smart to leave it alone until April and then roll it over. Cashing out would create taxable income AND trigger early withdrawal penalties if you're under 59½. Plus any withdrawal while on UC would need to be reported and could reduce your weekly benefits. Hope this helps ease your stress - unemployment is tough enough without worrying about things that aren't actually problems!