ESD wrongly disqualified me for 401k withdrawal - fighting this decision

omg the same thing happend to me last month!! i took $1500 from my 401k to pay bills cuz my claim was stuck in processing 4ever and then they said i was disqualified that week. its total bs, my 401k is MY MONEY not income from a job!!

Did you appeal? I can't believe they're doing this to people. How are we supposed to survive while they take 8+ weeks to process claims?

You absolutely should appeal this. You're correct that 401k withdrawals are NOT employment income and shouldn't affect your UI benefits. In your appeal, cite WAC 192-190-025 which specifically defines what types of payments are deductible from benefits. 401k withdrawals from your own contributions are NOT listed there. Also point out that UI benefits are insurance paid by employer taxes, not related to your personal assets. Be sure to include documentation showing this was your personal 401k, not an employer distribution. Good luck!

Thank you! I'll definitely look up that WAC code. Do you know how long the appeal process typically takes? My mortgage is due again soon.

I work in HR and deal with this stuff all the time. There's confusion at ESD between 401k DISTRIBUTIONS (which are retirement withdrawals of your own money) and 401k PAYMENTS (which are when an employer pays out retirement as part of a severance package). Only the latter should affect UI benefits. When you appeal, make this distinction very clear and explain these were your personal funds, not employer payments. Also, you should be continuing to file weekly claims during your appeal!

This is excellent advice. The distinction between types of 401k money is crucial in these cases. I've seen several appeals won on exactly this point.

the unemployment system is DESIGNED to deny ppl from gettin benefits!! they ask these 401k questions on purpose to confuse ppl and then deny them. i answered yes to that question and lost 2 weeks of benefits before someone told me i didnt have to answer it! the whole system is rigged against workers

Wait, you're saying the 401k question is optional? I thought we had to answer everything honestly. This is so confusing.

If you need to reach someone at ESD about this, try using Claimyr (claimyr.com). I was stuck in the same situation and couldn't get through on the phone for weeks. Used their service and got connected to an ESD agent in about 20 minutes who fixed my claim issue. They have a video showing how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3 - saved me from having to drain more of my retirement while waiting.

Thanks for the tip. I've been trying to call ESD for days with no luck. Will check this out because I need to talk to someone directly about my appeal.

I think there's some confusion about 401k withdrawals and UI benefits. If the 401k plan was with the employer who laid you off, and they contributed to it, ESD might count that differently than a 401k from a previous job or your personal IRA. Also matters if it was a lump sum or periodic payment. The rules are really complicated and ESD staff often get it wrong too!!! Make sure you're super specific in your appeal about where the 401k came from.

Good point about the source of the 401k. To clarify for everyone: if it's YOUR contributions to YOUR 401k (even if from the same employer), it's YOUR money and not deductible income. If the employer gave you a 401k payout as part of separation/severance, that's different and may be deductible. The key is whether it's truly YOUR money or additional money FROM the employer.

I had almost the identical situation last year! ESD disqualified me for a $3,700 401k withdrawal. I appealed and WON. Here's exactly what I did:\n1. Filed appeal within 30 days\n2. Continued filing weekly claims\n3. Got a letter from my former employer confirming this was MY 401k contribution (not theirs)\n4. Provided bank statements showing this was a one-time withdrawal (not pension/annuity)\n5. Quoted the specific WAC codes mentioned above\n\nThe judge ruled in my favor in about 45 days. ESD had to pay me back all the weeks they wrongly denied. Don't give up!

This is incredibly helpful! I'll follow your exact steps. Did you have a hearing or was it all done through documents?

Had a phone hearing that lasted about 20 minutes. The judge asked about the nature of the withdrawal, why I took it, and whether it was my money or employer money. Be ready to explain that you took it for emergency expenses while waiting for UI to process. Good luck!

im confused abt all this legal stuff but my neighbor works at dshs and she said they cant make you use your 401k before getting benefits. thats for welfare not unemployment. she said UI is like insurance your boss pays for you.

Your neighbor is correct. Unemployment Insurance is completely different from welfare programs. UI is funded by employer taxes and is an earned benefit. DSHS programs like TANF or SNAP have asset tests, but UI does not. This is a common misconception even among some ESD employees.

does anyone know if we need to report a 401k on the initial application? i have one but didnt touch it yet but im worried theyll deny me just for having one??

Just having a 401k doesn't affect your UI eligibility at all. You only need to report distributions/withdrawals if you receive them while collecting benefits, and even then, as this thread discusses, personal withdrawals from your own contributions shouldn't count against your benefits.

UPDATE: I called ESD today (finally got through!) and spoke with a claims specialist who confirmed that my 401k withdrawal SHOULD NOT have affected my benefits since it was my own money, not an employer payout. She's forwarding my case to a supervisor for reconsideration before I even need to go through the formal appeal. Fingers crossed! I'll update again when I hear back. Thanks everyone for the advice and support!

Great news! Hope they fix it quickly. Make sure to get the specialist's name and ID number in case you need to reference the conversation later.

dont get ur hopes up. they told me same thing 2 months ago and still waiting for the supervisor to