Can I withdraw from my 401K while on ESD unemployment without affecting benefits?

Taking money from your 401k shouldn't affect your unemployment benefits. ESD doesn't count retirement withdrawals as earned income that would reduce your weekly benefit amount. However, be aware of the HUGE tax penalties for early withdrawal - usually 10% federal penalty plus regular income tax. You might end up with only 60-70% of what you withdraw after taxes. As for getting paid for the weeks you've been waiting - unfortunately ESD won't release ANY payments until they finish processing your entire claim. It's extremely frustrating but that's how their system works.

I JUST went through this exact situation! Withdrew from my 401k while waiting for ESD to approve my claim. You do NOT need to report 401k withdrawals as income on your weekly claims. The money was already yours, so it's not considered earnings. BUT LISTEN - before you do anything drastic with your retirement savings, have you tried calling ESD to find out why your claim is delayed? Sometimes you can get it pushed through if you can actually reach someone.

i took $$ from my 401k last year during my claim and it was fine. esd didnt care. but man the TAXES killed me!! i ended up owing like $2800 to irs i didnt expect. be careful!!

I believe the CARES Act waived the 10% penalty on early withdrawals if you were affected by COVID, but that expired. Now you'll definitely get hit with penalties unless you're over 59½. Just FYI.

I had a similar issue with not being able to reach anyone at ESD when my claim was stuck for over a month. I finally used Claimyr (claimyr.com) to get through to an actual human at ESD. They have a system that waits on hold for you and calls you when an agent is reached. Saved me hours of redial hell. They have a video showing how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3 Once I got an agent on the phone, they found the issue with my claim (missing employer response) and manually pushed it through. Had my money within 3 days. Might be worth trying before tapping your retirement.

Important technical correction here: While 401k withdrawals don't count as "earnings" that reduce your weekly benefit amount, they ARE considered income for tax purposes. If you're receiving unemployment benefits, that combination of income sources could push you into a higher tax bracket for the year. Regarding getting paid for weeks you've been waiting - if your claim is eventually approved, you WILL receive all back payments for weeks you've properly filed. ESD doesn't process partial payments during adjudication, but they do pay retroactively once approved. Also, have you checked your ESD account for alerts? Sometimes there are pending issues that need documentation from you that aren't clearly communicated.

My sisters neighbor did this and ESD found out somehow and made her pay back ALL her benefits!!! They said she wasnt really unemployed because she had access to that money!!! BE CAREFUL!!!!

Look into a 401k LOAN instead of a withdrawal if your plan allows it. You avoid the tax penalties, and you're basically borrowing from yourself. The interest you pay goes back into your own account. Much better option if you can swing it.

Update on your question about weekly claims - if your claim is in adjudication, you should STILL be filing weekly claims every week while you wait. Many people don't realize this. If you haven't been filing, start immediately and try to file for any missed weeks (though there's a limited window for backdating).