IRA lump sum withdrawal while on unemployment (qualify, money, report)

[stupiddimbulb]

I hope to qualify for CA unemployment next week but am not getting a clear answer on IRA lump sum withdrawals. I recently filled out a form with Johns Hopkins to have my fully vested 401k transferred to an IRA once the thirty day period (after my termination date) has passed. I will then withdraw all of it. Will that affect unemployment at all?

[Rabrrita]

Nope. Once it's in an IRA, it's treated pretty much the same as withdrawing money from your own savings account or pulling cash out form under the mattress.

[eastcoastguyz]

Originally Posted by stupiddimbulb

I hope to qualify for CA unemployment next week but am not getting a clear answer on IRA lump sum withdrawals. I recently filled out a form with Johns Hopkins to have my fully vested 401k transferred to an IRA once the thirty day period (after my termination date) has passed. I will then withdraw all of it. Will that affect unemployment at all?

You only have to report earned income during the unemployment periods of reporting. So an IRA or 401(k) withdrawal has nothing to do with unemployment.

Make sure you are rolling over the 401(k) to a qualified IRA account with a bank or brokerage firm, otherwise you will have to pay tax that year on the entire lump sum as if it were earned income. If you think you need some of that money now to meet living expenses than only keep the part you really need, remembering that you need to pay tax on that amount too. As the bank or brokerage firm for details on rolling over to a qualified IRA. It must be an IRA account separate and established for the IRA only, it can't simply be a checking account or you risk the penalty within a short period of time if it isn't in an IRA.