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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Employment Law
Satisfied Customers: 118689
Experience:  20+ Years of Employment Law Experience
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I have a question for you. If I have an old 401k plan. In

Customer Question

I have a question for you. If I have an old 401k plan. In the plan is a total of $12,000. $9,000 of the $12,000 is money I put into the plan. $3,000 is the amount the employer contributed. If I only take out the $9,000 will it impact unemployment benefits in NJ?
JA: Because employment law varies from place to place, can you tell me what state this is in?
Customer: NJ
JA: Is the employment agreement "at will," union, full time or part time?
Customer: full time
JA: Anything else you want the lawyer to know before I connect you?
Customer: no
Submitted: 9 months ago.
Category: Employment Law
Expert:  Law Educator, Esq. replied 9 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
The NJ Unemployment Division has to determine how much of this 401k was employer-funded. 401k is also considered a "pension" by NJ - and your benefits will be adjusted according to the rules, which you can find at: http://lwd.dol.state.nj.us/labor/ui/claim/pensions.html
It is not as simple as you putting in $9000 and the employer putting in $3000, and you just withdraw the $9000, the unemployment division would reduce your employment benefits by 1/3 of the amount of the withdrawal from the 401K (approximately) as the employer contribution was 1/3 of the total account.
That said, you should still NEVER withdraw from a 401k while collecting unemployment benefits and NEVER withdraw from a 401k period if you can find the money another place, because the tax penalty of between 10% early withdrawal penalty and 20% mandatory withholding results in an IMMEDIATE 30% loss.
You could try to roll the 401K into an IRA and then make withdrawal from the IRA without the unemployment penalty, but you still take the 30% or so loss on the account for early withdrawals.
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Customer: replied 9 months ago.
IRA surrenders do no impact unemployment?
Expert:  Law Educator, Esq. replied 9 months ago.
Thank you for your reply.
The IRA is not an employment based retirement account, it is an individual savings account and as such unemployment is not generally implicated, but you could still suffer the tax liability hit.
Customer: replied 9 months ago.
Thank you
Expert:  Law Educator, Esq. replied 9 months ago.

Thank you for your reply.

Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page , as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.