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  1. #1
    Join Date
    Apr 2018
    Posts
    6

    Default Does a Withdrawal from an IRA Affect Unemployment Benefits

    My question involves labor and employment law for the state of: NewJersey I currently have have a 401k with previous employer that was employer matched. I was laid off and scheduled to collect unemployment. I want to roll over 401k into an IRA. If I withdraw on the IRA will my UE benefits be reduced? Appreciate any help. Thanks

  2. #2
    Join Date
    Oct 2016
    Posts
    4,301

    Default Re: Withdraw from IRA

    No but there will be a penalty for the withdrawal. Tax penalty that is.

  3. #3
    Join Date
    Apr 2018
    Posts
    6

    Default Re: Withdraw from IRA

    Can I withdraw from IRA for a hardship such as paying for Cobra. Thanks.

  4. #4
    Join Date
    Mar 2012
    Posts
    1,360

    Default Re: Withdraw from IRA

    Quote Quoting pinogrigio
    View Post
    Can I withdraw from IRA for a hardship such as paying for Cobra. Thanks.
    If you're that broke, then apply for Medicaid. It's based on your income right now (zero or close to it) until your UI kicks in. NJ expanded the program. COBRA is usually way too expensive.

  5. #5
    Join Date
    Apr 2018
    Posts
    6

    Default Re: Withdraw from IRA

    We don’t qualify.

    I carried the health insurance thru my job as my husband works for a small business. We had to take the Cobra for the first month being April 1st as he is being treated for a medical condition and will most likely do for the second month wihile I explore options in the insurance marketplace. Agreed, it is expensive. I just want to make sure that when I go to roll over 401k into IRA and maybe need to withdraw on it that my UI in not affected. Any ideas?

  6. #6
    Join Date
    Oct 2016
    Posts
    4,301

    Default Re: Withdraw from IRA

    Your UI will not be affected it is not needs based in any state in the country. If you and your termination qualifies you you could have $1billion and it wouldn't be affected.

  7. #7
    Join Date
    Mar 2012
    Posts
    1,360

    Default Re: Withdraw from IRA

    Quote Quoting pinogrigio
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    roll over 401k into IRA and maybe need to withdraw on it that my UI in not affected.
    This has already been established.

    However, if you're not 59-1/2, I don't know whether you can use your IRA to pay for certain things and avoid the 10% tax (not UI) penalty.

    Personally, I'd get a good zero percent on purchases or balance transfer card and CHARGE everything that I could to avoid taking out my retirement and paying a penalty. It's BS that when you're down, you get kicked (the penalty), but those are the rules. I don't know if you can make COBRA payments with a credit card, but if you can't, then you can charge your groceries, utilities, gas, and whatnot to preserve your cash to make the COBRA payments. Then clean up the mess later when your situation improves, and if it doesn't, you can kiss the debt goodbye in a bankruptcy. Retirement money has protections in a bankruptcy, but cash in a bank account, not so much. Then if worse comes to worse, you'll still have your retirement money to try to jump start your life. When you really think it about it, the retirement money should be the LAST resort, not the first.

  8. #8
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Withdraw from IRA

    Quote Quoting pinogrigio
    View Post
    We don’t qualify.

    I carried the health insurance thru my job as my husband works for a small business. We had to take the Cobra for the first month being April 1st as he is being treated for a medical condition and will most likely do for the second month wihile I explore options in the insurance marketplace. Agreed, it is expensive. I just want to make sure that when I go to roll over 401k into IRA and maybe need to withdraw on it that my UI in not affected. Any ideas?
    Medical expenses, including health insurance are valid exceptions to the 10% penalty. You still have to pay tax on the withdrawal however.

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