Unemployment Question

[GrtArtiste]

I was recently laid off after working for that employer 14+ years. I have a $10K retirement payment waiting for me if and when I choose to apply for it. For every week I apply for unemployment, I have to verify that I am not receiving nor have I applied for any such payment. Of course, the answer is an honest "NO". However, I fully expect to still be unemployed when the 26 weeks of unemployment are exhausted and I will need that retirement money then.

Question: can the state come after me to repay the unemployment benefits I did receive even though I will not apply for/receive the retirement until after the unemployment has ended? I can find nothing in the unemployment instructions which addresses this.

Thanks for any assistance.

 

[SwampSurvivor]

First, sorry to hear that you were laid off after 14 years

Laws vary state to state - but with that wording, you haven't applied for it and are not receiving it. You should be fine. A lot of people wait until their unemployment runs out.

In NY state, it's 1 year of unemployment benefits. It's some crazy, complex formula that works out to something like 1/2 of what you were making before, up to $400 a week.

 

[eljefino]

Are you near retirement?

I think the wording in the unemployment law is to make sure you don't have some annuity (from old money etc) that's paying out that you can't stop or control.

 

[Trav]

I would look into this more than carefully. The last thing you want is for them to determine you were not disclosing assets and demand every dime back or worse file criminal charges.
From the way it sounds they might see it as you want to exhaust your benefits before dipping into the money you could have today if you wanted it.

 

[supton]

What is this "retirement" payment? Money that would normally otherwise go into a 401k or similar? Wouldn't taking it as cash mean you got a check for this week and then that is it, no issues with claiming unemployment insurance, since there is no foreseeable income coming to you?

I wonder if you are better off just taking the money now and be done with it.

 

[GrtArtiste]

I am about 6 1/2 years away from retirement. I don't ever remember being told I had to disclose assets as yet not received. Only that receiving or applying to receive such assets would reduce or eliminate unemployment while still collecting unemployment. So far, I don't think I've violated any rules and that's what I'm hoping to verify. If I'm in the clear, then of course I'm hoping to have the unemployment money first and the other later considering how the job market is these days.

 

[Donald]

First - different states have different laws on UI. If you receive a lump sum severance that may not be viewed as wages income.

To obtain UI you cannot be earning wage income. If you have $500K in the bank, that is not considered. But work for 1 hour minimum wage at the Dollar Store and that will be considered a day worked.

I would apply for UI, reading every question carefully and answering it accurately, but I would not say, hey I got this extra $10K they will pay me when I want it.

Be carefully applying for jobs you do not want. Work for McDonalds for a week, realize you hate it and quit, then no more UI.

 

[GrtArtiste]

From 1999 to 2007, the employer contributed approx $1000 each year to this fund. I contributed nothing. The contributions stopped in 2007 but the $10K is the current sum of what the contributions and interest earned is worth. In 2007, I was offered to convert this fund to a 401k and I declined. Good thing too...I know at least one person who did and ended up losing almost everything.

 

[99Saturn]

OP - good luck.

Not sure what type of money this is but you probably want to look into any tax consequences to withdrawing that money as well if you haven't already - sounds to me like this might be an early distribution from a legacy pension plan that has since ended.

 

[GrtArtiste]

I think that's exactly what it is...a legacy pension plan that has since ended. I already know that it will be taxed as ordinary income when I do receive it and there shouldn't be any withdrawal penalty as I am now past the age of 59 1/2. Nothing has been distributed....YET. It's waiting for me when I do decide to receive it. The only other fact I know is that I must collect it before age 65. Not sure why, but that's what I was told.

 

[DBMaster]

In Texas, you could take the entire $10,000 now and it would not affect your UI at all. Once you stop getting a regular paycheck you are eligible to collect UI, period. I have collected while receiving accrued vacation, bonus, and six months' worth of severance pay.

The only thing TWC (Texas Workforce Commission) cares about is income you EARN while collecting.

 

[supton]

If you're unemployed this year then I'd think your tax liability is going to be low--you're not making much at the moment (no offense) and by your own admission you don't expect to be working any time soon. I'd contemplate taking the money as ordinary income if I didn't think my other assets could tide me over until retirement/next job. This $10k would thus be taxed at a relatively low rate, unless if you get a job very soon and then make up for lost wages.

I know very little about this sort of stuff, but pending any "real" advice this is what I'd think about doing, if I were in your shoes.

 

[99Saturn]

Originally Posted By: GrtArtiste
...The only other fact I know is that I must collect it before age 65. Not sure why, but that's what I was told.

Might flip to an annuity payment if you don't take the lump sum by 65?

 

[bullwinkle]

I'm sure, if you had to get it, you could roll it over into an IRA to avoid the tax hit. Not sure why it would affect UI-it's a retirement plan, not normal pay.

 

[Oldmoparguy1]

Originally Posted By: GrtArtiste
I was recently laid off after working for that employer 14+ years. I have a $10K retirement payment waiting for me if and when I choose to apply for it. For every week I apply for unemployment, I have to verify that I am not receiving nor have I applied for any such payment. Of course, the answer is an honest "NO". However, I fully expect to still be unemployed when the 26 weeks of unemployment are exhausted and I will need that retirement money then.

Question: can the state come after me to repay the unemployment benefits I did receive even though I will not apply for/receive the retirement until after the unemployment has ended? I can find nothing in the unemployment instructions which addresses this.

Thanks for any assistance.

GrtArtiste I feel for you. I was forced into early retirement at age 56.

You should check to see if you can do a rollover into an IRA with the money.. If you can, then open an IRA somewhere and do a rollover distribution. The money will be tax deferred and a verifiable retirement distribution and not income. This may not be possible, but I sure would look into it. IRA's can be a handy financial tool, especially at your age.

Good luck,

Wayne

 

[rjundi]

You can wait.

I worked for 7 months unpaid as a IT contractor after being laid off from job and collected away against unemployment. Finally the client paid up and it was legit apparently what I did according to state office.

 

[threeputtpar]

Some pretty good suggestions already, that I'll combine.

If you are really going to be on UI for the rest of the year (or most of it), you will be in a lower tax bracket. If at all possible, take the distribution and roll it into a Roth IRA and pay the tax now at the lower rate and reap the benefits of tax free interest on it going forward.

As far as if it will mess with your UI benefits, typically UI only cares about earned wages when calculating benefits. The $10k is not wages, so it shouldn't affect the UI bennies. Check with OH UI just to make sure though.