Unemployement and 401k

[TimothyC]

My question involves unemployment benefits for the state of: Alabama

Good morning,

On September 26, 2011 the company that I worked for, told us that September 30, 2011 will be out last day working for them. The company was sold and many positions including mine were eliminated. I filled for unemployement and just stated receiving benefits the last week of October. I just found out that my former employers contributed to a 401k and I was eligible to withdraw or cash out these funds with the exception of 20% for an early withdrawal fee and taxes.

My question is this:
If I cash out the funds, will I loose unemployement benefits? I have read online that it shouldn't affect it because its not considered gainful income. The amount that I'm eligible for is around 2100 dollars after subtracting the 20%

Thank you for any help you can give,
Tim

[cbg]

No, cashing out your 401k will not affect your UI benefits. It is not a good idea for many reasons, but affecting UI is not one of them.

[TimothyC]

Thank you for your reply.
I want to cash out as a last resort.