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I was laid off earlier this year and still looking for work. I only have about a month left of unemployment. However I need additional funds ASAP for something urgent. Am I able to make an early withdrawal from an IRA without claiming it to unemployment? (State of Virginia) I understand if you claim it then you may lose your unemployment benefits for that amount (I think?) FYI, this IRA is from two companies ago, not from the company that laid me off. I also have been paying for health insurance this entire time....thought I read you could make withdrawals to pay for the health insurance without getting penalized.
401K NO! If you want money from a 401K then you roll it over to an IRA, and then withdraw from the IRA.
As to the tax consequences, I don't know.
Thanks. I’m not concerned about the tax issue, I just want to know if:
A) Am I required to report this to unemployment?
B) Will they withhold my unemployment in lieu of this withdrawal and if so, how much do they withhold?
Just make sure it is an actual IRA and not a Defined Contribution Plan being mistakenly called an IRA. There have been people who call their 401K or 403B plans IRA's by mistake, especially when parked at their former employer.
Oh phew, thanks. But when I call into the unemployment line, one of the questions is “did you begin receiving any pension” ...something like that. The IRA withdrawal wouldn’t be included in that?
Just make sure it is an actual IRA and not a Defined Contribution Plan being mistakenly called an IRA. There have been people who call their 401K or 403B plans IRA's by mistake, especially when parked at their former employer.
Ok thank you, I will confirm with them. This was formerly a 401K which I rolled over to an IRA after I had left that company. I believe the statements and tax forms state “IRA” but I will double check.
If you rolled it over from the employer, that is an IRA and you're O.K. As Chyvan stated, an IRA is not a pension, systematic periodic withdrawal or any retirement annuity payment from an employer plan.
I would advise against it, you should leverage credit cards if you could and find a few gigs like Uber to make ends meet. The tax consequence are big but if you have nothing else left you can borrow money from your IRA but you have to pay back within 6 months without penalty.
But hey, if you have no other options go for it.
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