Will my 401K withdrawal affect my TWC unemployment benefits after overpayment deduction?

Good news for your situation! According to the Texas Workforce Commission, will withdrawing my 401k affect my unemployment benefits in Texas? Generally no - if you took the money as a lump sum withdrawal, your unemployment benefits should not be impacted. TWC has specifically addressed this question, confirming that one-time 401k withdrawals don't affect benefits (https://x.com/TXWorkforce/status/1262428318504288264). Just be careful about how you withdraw the funds. While a one-time withdrawal is fine, setting up monthly withdrawals from your 401k could potentially impact your benefits. The difference matters in how TWC categorizes the income. You should still report the withdrawal when you request your payment, though. What happens if I don't report 401k withdrawal to unemployment? You could potentially end up with another overpayment situation, which you're already dealing with. Since you're specifically concerned about does 401k withdrawal affect unemployment benefits in Texas, the key thing to remember is that as long as it's not regular periodic payments, you should be okay. Keep in mind that while your unemployment isn't affected, you'll still have tax implications from the withdrawal itself, and possibly early withdrawal penalties depending on your age. But at least your weekly benefits should remain stable during this tough financial time.

same thing happened 2 me last month. i took out 5k from retirement and TWC never knew about it. still getting my payments no problem

I DID THIS LAST YEAR and it COMPLETELY messed up my benefits!!! TWC counted it as income for the weeks I received it and reduced my payment to ZERO for two payment periods. The system is RIGGED against us!!!! They take forever to pay us then punish us when we try to survive!

Your 401K withdrawal shouldn't affect your unemployment benefits. According to TWC rules, only earned income (like wages from working) needs to be reported during your biweekly payment requests. Retirement distributions aren't considered earned income for unemployment purposes. However, you WILL need to report this withdrawal on your taxes next year since it will be considered taxable income by the IRS, and there might be early withdrawal penalties depending on your age and situation.

when i was on unemployment last year i had so many problems with my claim and could never get through to TWC. busy signals for DAYS. my cousin told me about this service called Claimyr that got me connected to a TWC agent in like 20 minutes instead of spending hours redialing. check out their demo at https://youtu.be/V-IMvH88P1U?si=kNxmh025COIlIzKh - their website is claimyr.com. saved me so much frustration when i had questions about my claim that couldnt be answered online

I work in financial services (not with TWC) and wanted to clarify something important: your 401K withdrawal has tax implications but doesn't impact unemployment eligibility. However, if you withdrew from a 401K due to COVID hardship between 2020-2022, different rules applied during that period which might be causing some confusion in the responses you're seeing. For current 2025 withdrawals: 1. TWC doesn't count 401K distributions as earned income for benefit calculations 2. You'll owe income tax on the withdrawal amount 3. If you're under 59½, you'll likely face a 10% early withdrawal penalty 4. This withdrawal has no effect on your overpayment recoupment situation Your overpayment situation is completely separate - TWC will continue to recover that debt by reducing your current benefits until the overpayment is satisfied.

wait so they take money out of ur current benefits to pay for a mistake from 2020?? thats crazy how much are they taking?

Just to add to the good advice already shared - I called TWC about a similar situation last year. The representative confirmed that 401K withdrawals don't count as earned income for unemployment purposes. However, make sure you're prepared for tax season next year - depending on how much you withdrew, it could bump you into a higher tax bracket. Also, if the 401K withdrawal was substantial, it might affect other income-based benefits you receive (like SNAP or healthcare subsidies), even though it doesn't affect your unemployment benefits.

I'm confused...so we don't report 401k withdrawals on payment requests? What about severance pay? My company gave me severance when they laid me off last month but I haven't received the check yet. Do I report that?