Will withdrawing from my 401k affect my ESD unemployment benefits?

Yes, 401k withdrawals can definitely impact your unemployment benefits, but it depends on how you take the money out. Here's what you need to know: - If you take a one-time withdrawal (like a hardship withdrawal), ESD generally won't reduce your benefits - If you start receiving REGULAR pension/retirement payments, ESD will likely reduce your weekly benefit amount - Loans from your 401k typically don't count as income for unemployment purposes The key is how you report it. On your weekly claim, you only need to report retirement income that's paid regularly like a pension. A one-time withdrawal isn't considered ongoing income. Make sure to check the specific instructions on the question carefully.

I did this last year and had no problems with my unemployment. Just took out $4000 to fix my car and pay some bills and didnt have to tell ESD about it. One time withdrawls are fine its not income

jst make sure ur aware of the tax penaltys too. i had to pay 10% extra tax plus my regular tax rate when i took $ from my 401k last year. it ended up being like 30% total taxes!! plus u have to claim it all as income on ur taxes which could push u into a higher bracket.

The exact wording of the weekly claim question is important here. It asks if you've received any "pension, retirement, or disability payments." One-time 401k withdrawals don't technically fall under this category since they're not regular payments. However, if you start receiving periodic distributions from your retirement account, that would count and would likely reduce your benefits by the following formula: - If your employer contributed 100% to the plan, your weekly benefit is reduced dollar for dollar - If contributions were split between you and employer, benefits are reduced proportionally to the percentage your employer contributed - If you funded it entirely yourself, there's no reduction I'd recommend calling ESD directly to confirm before making any withdrawals, as policies can change and your specific situation might have unique factors.

When I was on unemployment last year, I was in the same situation and absolutely could NOT get through to ESD to ask questions about my 401k. After spending days trying, I found this service called Claimyr (claimyr.com) that got me connected to an actual ESD agent in about 20 minutes. They have a video showing how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3 The agent confirmed that a one-time withdrawal wouldn't affect my benefits but gave me specific instructions on how to note it in my file. Definitely worth connecting with a real person at ESD before making financial decisions that could impact your benefits.

I'm actually an accountant (though not giving professional advice here!) and I'd strongly caution against taking money from your 401k unless you have absolutely no other options. Beyond the unemployment question, you're looking at: 1. 10% early withdrawal penalty if you're under 59.5 years old 2. Federal income tax (and possibly state) on the full amount 3. Loss of future growth in your retirement account Have you looked into other options like: - Hardship assistance programs through utility companies - Temporary assistance programs through local nonprofits - 0% interest credit cards for short-term needs - Unemployment extensions if available A 401k withdrawal should really be a last resort due to the long-term financial impact.

i borrowed from my 401k insted of taking a withdrawl cuz then i dont pay the penelty and i can pay it back when i get a new job. mayb check if ur plan allows loans??

WHATEVER YOU DO DON'T take money from your 401k while on unemployment!!! My cousin did this and ESD came after him for FRAUD and he had to pay back ALL his benefits!!! They watch everything!!

Thanks everyone for all the great advice! After considering all your suggestions, I think I'm going to: 1. Try to reach ESD directly using that Claimyr service to get official clarification 2. Look into a 401k loan instead of a withdrawal to avoid the tax penalties 3. Check out some of the hardship assistance programs mentioned Really appreciate all the help - this has given me a much clearer picture of my options!

Great plan @Javier! Just wanted to add one more resource that might help - many 403(b) and 401(k) plans also offer in-service hardship withdrawals for specific qualifying expenses like preventing eviction or foreclosure, paying medical bills, or covering funeral costs. These still have the tax consequences but might have less paperwork than a loan. Also, if you do end up needing to take any distribution, keep detailed records of everything - the date, amount, type of withdrawal, and any correspondence with your plan administrator. This documentation will be super helpful if ESD ever has questions later. Washington also has some emergency rental assistance programs that are still operating in some counties if housing costs are your main concern. The 211 helpline (dial 2-1-1) can connect you with local resources that might help bridge the gap without touching your retirement savings. Hope you can avoid the 401k withdrawal altogether - your future self will definitely thank you for preserving that retirement nest egg!

Just want to echo what others have said about trying the 401k loan option first if your plan allows it. I went through a similar situation about 8 months ago and ended up doing a loan instead of withdrawal - saved me thousands in taxes and penalties. The process was pretty straightforward through my plan's website, and I was able to get the money within a week. The payments come out of my paycheck automatically now that I'm back to work, and like someone mentioned, the interest I pay goes back into my own account. One thing to watch out for though - if you do lose your job again while you have an outstanding 401k loan, most plans require you to pay it back within 60-90 days or it becomes a taxable distribution. Just something to keep in mind given the current job market uncertainty. Also wanted to mention that Washington has expanded their food assistance programs recently, so that might free up some cash for other bills if you qualify. Worth checking into along with the other resources people have shared. Good luck with whatever you decide - sounds like you're being really thoughtful about weighing all your options!

I went through this exact situation about 6 months ago and want to share what I learned from actually speaking with an ESD representative. The key distinction is between "pension payments" (which are regular, ongoing distributions that can reduce benefits) and one-time withdrawals (which generally don't affect your weekly benefit amount). However, there's an important nuance - while a one-time 401k withdrawal typically won't reduce your unemployment benefits, you still need to be careful about how much you withdraw and when. If you take out a large amount, it could potentially affect your eligibility for other assistance programs or push you into a higher tax bracket as others mentioned. I ended up taking a smaller withdrawal than I originally planned and supplemented it with some of the local assistance programs. The United Way in King County has a great database of emergency financial assistance programs, and many utility companies will work with you on payment plans if you explain your situation. Also worth noting - if you're considering this because of housing costs, Washington's eviction moratorium protections may still apply in some situations, giving you more time to find other solutions. The 401k loan route really is worth exploring first if your plan allows it. Just make sure you understand all the terms, especially what happens if you can't find work within the repayment period.

I just wanted to add another perspective as someone who works in HR and deals with benefits administration. Before you make any decisions about your 401k, I'd strongly recommend checking if your employer offers any employee assistance programs (EAP) that might still be available to you even after separation. Many companies provide financial counseling services through their EAP that can help you explore all your options. Also, if you haven't already, make sure you've applied for SNAP benefits (food stamps) and looked into Washington's Low Income Home Energy Assistance Program (LIHEAP) for utility bills. These programs can free up cash for other expenses without touching your retirement savings. One more thing - if you do decide to go the 401k route, consider taking the withdrawal early in the tax year (like now) rather than later. This gives you more time to plan for the tax impact and potentially adjust your withholdings or make estimated payments to avoid a big surprise come tax time. The community has given you some really solid advice here. Take your time to explore all the assistance options first - there are more resources available than most people realize, especially in Washington state.

One thing I haven't seen mentioned yet is checking with your local credit unions - many of them offer emergency financial assistance programs or low-interest hardship loans that could be a much better option than touching your 401k. I used to work at a credit union and we had several programs specifically designed for people going through unemployment. Also, Washington State has a program called the Utility Discount Program (UDP) that can reduce your electricity bill by up to 60% if you qualify based on income. Combined with some of the other assistance programs people mentioned, you might be able to avoid the retirement account altogether. If you do end up needing to access your 401k, definitely explore the loan option first, but also ask your plan administrator about any COVID-related withdrawal provisions that might still be available - some plans extended special withdrawal options with reduced penalties for financial hardship. The fact that you're asking these questions and thinking it through carefully shows you're being really responsible about this decision. Hope you find a solution that doesn't require dipping into your retirement savings!

As someone who went through a similar financial crunch while on unemployment, I wanted to share a few additional resources that really helped me avoid touching my 401k: 1. **Washington 211** - Just dial 2-1-1 from any phone. They connected me with local food banks, rental assistance, and even help with my car insurance payment. The operators are really knowledgeable about what's available in your specific area. 2. **Salvation Army and Catholic Community Services** - Both offer emergency financial assistance for utilities, rent, and sometimes even car repairs. You don't have to be religious to get help, and they were much faster than some government programs. 3. **Local churches** - Even if you're not a member, many have benevolence funds for community members in crisis. I was really hesitant about this at first, but they helped me with a $300 utility bill, no questions asked. 4. **Plasma donation** - Not glamorous, but you can earn $50-80 per visit at places like CSL Plasma. It helped bridge the gap while I was waiting for other assistance to come through. The key thing I learned is to apply for multiple assistance programs at once rather than waiting to hear back from each one individually. Some have waiting lists, but others can help within days. Your 401k will be there when you actually retire - try these other options first! You've got this. 💪

I've been following this thread and wow, what an incredible resource this has become! As someone who also struggled with finances during unemployment last year, I wanted to add one more option that really saved me: **gig work that doesn't affect unemployment benefits**. Washington allows you to earn up to 25% of your weekly benefit amount without any reduction in benefits. So if your weekly benefit is $400, you can earn up to $100 without penalty. This opened up options like: - Food delivery (DoorDash, Uber Eats) on weekends - Online tutoring or freelance work - Task-based work through apps like TaskRabbit I was able to earn an extra $300-400 per month this way, which was enough to avoid touching my retirement savings entirely. Just make sure to report the earnings accurately on your weekly claims. Also wanted to echo what others said about **Washington's Working Family Tax Credit** - if you qualify, you could get up to $1,200 as a state tax credit, which can really help with next year's tax planning. The combination of unemployment benefits + small gig earnings + assistance programs mentioned in this thread can often bridge the gap without the massive long-term cost of early 401k withdrawals. Your future retired self will definitely thank you for exploring every other option first!

This thread has been absolutely incredible to read through! As someone who's currently dealing with similar financial pressures while job searching, I can't thank everyone enough for sharing such detailed and practical advice. I wanted to add one more resource that helped me recently - **Washington's Basic Food Program** (SNAP) has emergency expedited processing if you have less than $150 in resources and your monthly income is under the gross income limit. They can approve benefits within 3 days instead of the usual 30-day process. This was a lifesaver when I was down to my last $50. Also, for anyone in King County specifically, the **King County Library System** offers free financial counseling sessions where they help you create a budget and identify local assistance programs. I had a virtual session last month and the counselor knew about programs I'd never heard of, including some small grants from local foundations. @Javier, it sounds like you've got an amazing action plan now! The combination of calling 2-1-1, exploring gig work within the 25% earnings limit, and checking out all these assistance programs should give you multiple options before even considering your 401k. And if you do end up needing to access retirement funds, at least now you know about the loan option versus withdrawal. This community is honestly the best - the way everyone jumped in with real, actionable advice instead of just opinions is exactly what makes these forums so valuable. Definitely bookmarking this thread for future reference!

This entire thread has been such an amazing resource! I'm actually in a similar situation right now and was also considering a 401k withdrawal, but reading through all these responses has completely changed my approach. I had no idea about so many of these programs - the 25% gig work earnings rule, the expedited SNAP processing, the Utility Discount Program, even just calling 2-1-1. I've been so focused on the "big" solutions like raiding my retirement that I missed all these smaller assistance programs that could add up to real help. What really struck me is how many people shared that they successfully avoided 401k withdrawals by combining multiple smaller resources. It's like building a financial safety net from several different programs rather than taking one big hit to retirement savings. Going to start tomorrow with calling 2-1-1 and my credit union, then apply for SNAP and look into some weekend gig work. Even if I only get approved for a few of these programs, it sounds like it could make the difference between financial stability and having to tap retirement funds. Thank you to everyone who shared their experiences - this thread should honestly be pinned as a resource for anyone facing financial hardship while unemployed! The level of practical, actionable advice here is incredible.

Just wanted to jump in as someone who went through this exact situation about 8 months ago. I was really torn between taking a 401k withdrawal and trying to make ends meet, and this thread captures so many of the same concerns I had. What ended up working for me was a combination approach that several people have mentioned here. I started with the 2-1-1 call (which was incredibly helpful - they knew about local programs I'd never heard of), got approved for expedited SNAP benefits, and picked up some weekend Instacart deliveries to earn that extra income within the 25% limit. The thing that surprised me most was how quickly some of these assistance programs kicked in once I applied. The utility assistance through my local community action agency helped within 2 weeks, and the food assistance freed up enough of my budget to cover other bills without touching retirement savings. I also want to second what others said about documenting everything if you do end up taking any distributions. I kept detailed records of all my applications and assistance received, which gave me peace of mind about my unemployment reporting. The financial stress during unemployment is so real, but this thread shows there really are more resources available than most people realize. Hope everyone facing these tough decisions finds a path that preserves their retirement security while getting through the immediate crisis!

This thread has been absolutely incredible - probably the most comprehensive resource I've seen on navigating financial hardship while on unemployment! As someone who's currently in the thick of job searching after a layoff, I can't thank everyone enough for sharing such detailed, practical advice. What really stands out to me is how this discussion evolved from a simple question about 401k withdrawals into a complete guide for financial survival during unemployment. The breadth of resources mentioned here is amazing - from the 2-1-1 helpline to gig work earnings limits to expedited SNAP processing to credit union hardship loans. I'm particularly grateful for all the real success stories shared. Hearing from people like @Savanna and @Vera who actually navigated similar situations without touching their retirement savings gives me so much hope. It shows that even when things feel overwhelming, there really are viable alternatives if you know where to look. I've been making a master list of all the resources mentioned here: - Washington 211 (dial 2-1-1) - Utility Discount Program (up to 60% off electricity) - SNAP with expedited 3-day processing - Credit union emergency assistance programs - Gig work up to 25% of weekly benefit amount - Local churches and nonprofits for emergency aid - King County Library financial counseling - Washington Working Family Tax Credit Between all these options, it really seems possible to build a comprehensive support system that can bridge the gap without the massive long-term cost of early retirement withdrawals. This community knowledge-sharing is exactly why forums like this are so valuable - real people helping real people with actionable solutions. Definitely bookmarking this thread for future reference and to share with others who might be facing similar challenges. Thank you all for creating such an incredible resource! 🙏