NJ Unemployment Benefits Suspended Due to Receiving 401K Pension: Claims Examiner Non Monetary Interview Recap (file, receive)

[starfive]

I am contributing to this forum to help anyone who has, will be or is worried about going through the process of an Unemployment Benefits Claims Examiner "Non-Monetary" Phone Interview. I can only share my experience based on the state of which I live in NEW JERSEY.

BRIEF BACKGROUND: I was employed by my company for 10 yrs. I started as an Acct Executive then held a Purchasing Manager position in production prior to my separation from my employer. Overall I have had no issues regarding my work related performances. I worked very hard and above and beyond my work responsibilities which my bosses appreciated and compensated me for through the years.

As of last year I became pregnant. During my 7th month I was placed on BED REST due to pre-term labor & temporarily stopped working F/T. I applied for DISABILITY as was given DISABILITY benefits until the end of maternity leave. After maternity leave/disability benefits expired I was granted FAMILY LEAVE benefits for 6 add'l wks which company approved. Due to child care issues, I specifically informed my employer I would be back 1 month (w/o benefits) after FML to resume F/T work. The week before my return to work date, received email from employer stating they're relieving me of "services" due to "LACK OF WORK". I was devastated, upset & then angry due to my "valued" history w/company. They approved me for unemployment for 26 weeks.

Due to my financial situation the UE benefits were covering about 80% of my expenses. However, I had to make the hard decision to find alt resources of income for expenses w/additional dependent & high costs of housing it was getting tight. So I applied for full distribution of my 401K pension as a lump sum minus 20% Fed Tax W/H and later the 10% early withdrawal penalty under a "hardship". The monies to be used for D/P to purchase 1st home. Week I claimed UE they suspended payment and said I was to undergo Claims Interview in 6 weeks. For 6 weeks NO payments, but I still claimed every wk I was unemployed & still actively looking for employment. It was stressful and nerve racking not receiving anything and impacted our finances tremendously.

Had interview this wk and interviewer asked q's about name, SS#, address, employer name, dates employed, reason for separation, if I was actively seeking work, did I turn down work, did I receive vacation or commission pay, if I applied for received pension (yes), the amount/date, from what retirement company etc. They had connected my former employer on the other line (which I was surprised about) to confirm my statements & all seemed correct. Today (2 days later), I was granted my "same" UE benefits with back payment of the 7 out of 8 wks I did not receive when my status was "pending". Overall, they did not pay benefits for the 1 wk when I was issued my 401k payment. I was relieved and feel I can "breath" again knowing I can cover the expenses and make changes to reduce my expenses altogether.

So for anyone who is wondering about what to expect or have concerns feel free to comment and we can discuss to make your overall feeling more worry-free. In conclusion, the pensions you contributed to (& employer match) are yours with obligatory tax deductions to FED/State if taken before retirement age & does affect receiving UE benefits which you will be interviewed. The interviewer was nice, polite and straight forward & told me decision was to be made within 10-14 days and if not granted in my favor can apply for an appeal. Let me just add this last thing, I was asked if I wanted to make a final statement and I did. After hearing my "plea" the claims examiner said, "Wow you mean to tell me that after all your time with your company and having to rely on UE benefit support knowing you were to go back to your F/T job they decided to laid you off?" My response was "YES"...her response back to me was "UNBELIEVABLE how they did that to you!" I agreed and said thank you for your time and I hope this can reinstate my status soon and luckily it DID!

[Rabrrita]

Thanks for the first hand info. Many people get all confused and upset to the point they create more of a mess than necessary. Since you were technically terminated for no work, you automatically get benefits and there was nothing your employer or the state could have done to deny them. Since you took a 401K lump withdrawal, it only impact the week of the withdrawal and no other weeks. So your case was pretty easy and glad it didn't get complicated over nothing. You would not believe how many others would have been in your situation and panicked and started doing and saying things that would have caused an issue. Good post to let others know they system works when you let it work and no need to overthink when the regulations clearly favor them.

[starfive]

Thank you Rabrrta. I believe there are difficult cases which become complicated, it turns into a "battle" for securing at least some financial security & UE benefits help tremendously and a true benefit to tax payers such as ourselves. I felt compelled to contribute my experience as I too was initially worried but fully prepared to answer the questions openly & honestly w/o getting emotional although my feelings inside were very worrisome. Like you said, some people just need that support and to know under no fault of your own when a separation occurs with your employer it is just a "business" decision. I knew the financial standings w/in the company so I wasn't ruling out their decision for them to reduce their overhead costs as necessary in order to continue business. Had my lay off been under a "misconduct" type issue then there are always a 2-sided debate as to who was at fault or what responsibilities wasn't satisfied at the job etc which lead up to a true "firing". Those issues seem much more like being on trial defending oneself & having the right proof to support ones claim, then the burden becomes the NEED to pursue an appeal for UE benefits eligibility which is the ultimate goal. Fortunately for me, that wasn't my experience.


Hardships are what they are "hardships". Lack of steady income is a reality a person faces when income stops permanently and so many issues come into play, its quite scary in todays day when everyone is trying to allocate their money to cover even the basics. In my case, when faced to withdraw part or full 401k distribution from my retirement fund was very risky (I know this because I consulted my financial advisor prior to making the decision) and if I had another option I would have NOT made that move but I didn't. NJ UE benefits eventually come to an end but the process is fair and just so I understand their holding back & waiting period. I know the ramifications on doing this but I can only speak for my family decision, it was necessary to avoid bigger issues down the road. The feeling within my heart was to protect my family and they always come FIRST.

[Chyvan]

Originally Posted by starfive

So I applied for full distribution of my 401K pension as a lump sum minus 20% Fed Tax W/H and later the 10% early withdrawal penalty under a "hardship".

This was your mistake that caused the 6-week delay in the first place. Had you done a trustee to trustee transfer to an IRA, you'd have avoided the withholding, AND the 6-week delay to you benefits, the phone interview, and the one-week offset.

Then you'd have been able to withdraw from the IRA. You'd have maybe been able to wait until after Jan 1, 2017 to reduce the tax hit because of the marginal rates in a year when you worked nearly the full year.

I think it's great that you didn't make a mess of your UI, but the real learning is that you still could have gotten your hands on the money, avoided problems, and maybe kept more of your money if you'd just did things differently.

Originally Posted by Battle21

Now im trying to see what are my odds to winning a appeal??

Have you received a determination? Type in all the words.

[starfive]

Thanks Chyvan...You are correct I should have waited after UE benefits to expire but it just wasn't feasible. I accepted taking the tax hit and settled with my decision. Also roll over to IRA there is one a one time per year 10K withdrawal for "hardship" in my case purchase of first home and that wouldn't have been enough to proceed with changing my current residence towards the D/P. Overall, the claims examiner interview experience was pretty straight forward.


The waiting period for interview then release of funds was the hard part...My mind was all over the place. It is great everything went on smoothly. I hope others have the same experience and can get a little piece of mind if they read my post. Thanks.

[Chyvan]

Originally Posted by starfive

You are correct I should have waited after UE benefits to expire

You're not getting it. Trustee to trustee is NOT waiting until the UI expires, and it's NOT a rollover. Money from a 401K gets this type of scrutiny, but money out of an IRA does not.

I just wanted you to make smart decisions until Jan 1 so that you could manipulate your gross pay for the year to reduce the tax hit because of the progressivity of the tax tables.

Imagine, you're still out of work 15 months from now. Then in 2017, you have a whopping taxable income of zero, and your standard deduction went to waste.

You still might be able to put the money into an IRA, and undo some of the damage, and then draw it right back out.

Think out of the box.

Originally Posted by starfive

Also roll over to IRA there is one a one time per year 10K withdrawal for "hardship" in my case purchase of first home

Yeah, but with an IRA you can take out the money anytime you want and you don't need a "hardship."

You need to learn the difference, and what you can do. To me, you didn't do things in the most advantageous way, and you're not learning from your mistake.

[Pinogrigio]

I was recently laid off March 2018 due to staff reduction, lack of work. I have a 401k with this employer. It was my contribution and a match by employer.I filed for unemployment and received a determination that allows me to collect. I am confused as to what I should do with the 401k and unemployment. I read somewhere that you can roll the 401k in a personal IRA and that wont affect your benefits. Any help or advice is appreciated. My stress level is off the charts.My state is New Jersey

[Chyvan]

Originally Posted by Pinogrigio

I read somewhere that you can roll the 401k in a personal IRA and that wont affect your benefits.

This is correct. 10 minutes after the 401K is in your IRA, you can withdraw the IRA and have ZERO issues with your UI benefits.

[Pinogrigio]

I am set to file my first claim this week. I have not done anything with the 401k yet because employer still has me as active. Was your experience with New Jersey? Thanks

[Chyvan]

It's just the rule. You can read it on NJ UI website. Only 401K withdrawals that have employer match in them that goes into your pocket affect your benefits. If the money travels into an IRA, and then into your pocket, it breaks the connection.