My wife getting laid off. We are in Texas. Her severance package we are mostly gonna use to pay off bills. She is 55 now so can retire with benefits, whatever that means. Also can cash out her 401 k which isn’t much we can live off that for a year. But can she get unemployment. She will be looking for another job outside AT&T. Or do we have to wait till severance package and 401k run out before she Foles for unemployment?
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Great summary list. One more suggestion... if you plan to file for unemployment benefits, you might wanna hold off applying for the pension money until the unemployment checks stop. In many states pensions will be subtracted from your unemployment money, even if taken as a lump sum if monthly payment was an option.
There are cases where it doesn’t count, such as pension income received from a previous employer. In Calif they ask you about pension income on the initial unemployment application, as well as on the recertification form. I have a friend who receives military pension (payments started 25 years ago). That income was reported but didn’t affect unemployment benefits because it wasn’t a recent employer pension. His pension from recent employer he was laid off from would have been deducted. He held off applying for that money until AFTER he exhausted his unemployment benefits. Keep in mind, when you’re receiving unemployment benefits you’re technically supposed to be looking for another job, not sitting at home or abroad living the retired life.
Many people covered the important facts here. 1) she is entitled to unemployment 2) since she is 55 she can withdraw from her 401k WITHOUT penalty. 3) DO NOT roll 401k over into an IRA until she is 59 1/2. 4) Keep in mind that AT&T's 401k plan only allows 4 withdrawals a year, so plan accordingly. 5) I don't know how many years she has with the company but don't forget about her pension plan 6) you can roll over the lump sum pension into an IRA if you choose 7) speak to a financial advisor / retirement specialist.
OK BTDT in Texas. Apply for unemployment on her first day not employed. They only ask the last day you worked for money. As far as retirement benefits, that all depends on who she originally hired on to. However she may be able to participate in company healthcare with subsidized premium, some lousy discounts on products and services. If you currently have that $10 Direct TV, start looking at new options, cost will go up 10X. Uverse Internet is the only real decent discount. I am getting 50MB for $20/MO. Wireless goes to 30%, however the over 55 plan at T-Mobile beats any AT&T plans. They get $35/mo/line for unlimited everything. Good Luck. Be sure to take advantage of outplacement services they offer. I found they help a lot.
She qualifies for unemployment if she meets the rules being laid off is 1. Past wages, and ongoing. Eligibility are the others. . Apply on her first day of being unemployed. Here is the website, https://twc.texas.gov/jobseekers/eligibility-benefit-amounts#unemploymentBenefitsEligibility
I don’t know about TX, but in NJ you get unemployment even if you get severance. Probably the same in other states.
Talk to Fideiity. Each AT&T employee has free access to Financial Planners. I meet with mine at least once per year to re-evaluated and discuss options.
Refer to https://www.irs.gov/retirement-plans/plan-participant-employee/401k-resource-guide-plan-participants-general-distribution-rules. Also talk to a tax/financial advisor. Based upon this link, says:
A distribution is deemed to be on account of an immediate and heavy financial need of the employee if the distribution is for:
Expenses for medical care previously incurred by the employee, the employee’s spouse, or any dependents of the employee or necessary for these persons to obtain medical care;
Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments);
Payment of tuition, related educational fees, and room and board expenses, for the next 12 months of postsecondary education for the employee, or the employee’s spouse, children, or dependents;
Payments necessary to prevent the eviction of the employee from the employee’s principal residence or foreclosure on the mortgage on that residence;
Funeral expenses; or
Certain expenses relating to the repair of damage to the employee’s principal residence that would qualify for the casualty deduction under IRC § 165.
I would advise NOT to roll over the 401k to an IRA. Since she is 55 she will be exempt from the IRS 10% penalty if she needs to withdraw from it before age 59 1/2. That IRS exemption only applies to 401k, not IRA. If rolled to IRA, any withdrawal (from IRA) before 59 1/2 will be assessed the early withdrawal 10% penalty.
Her 401k is a measley 47,300 currently. Not gonna break us. Mine will be over 600k if I work another 13 years at AT&T. Wishful thinking
Only cash out your 401k as a very last resort. Roll it over to an ira along with the pension buyout if possible.
FYI if really needed..The IRS Rule of 55 allows an employee who is laid off, fired, or who quits a job between the ages of 55 and 59 1/2 to pull money out of their 401(k) or 403(b) plan without penalty. ... 2 If you have money in a former 401(k) or 403(b), it's not eligible for the early withdrawal penalty exemption
Talk to a real retirement planner like the other poster said. Don’t cash out your 401k, that is just stupid. Pay off your debt. Get another job if you need money, at least part time if you want get out of the rat race. If you cash out all your savings you will just be poor and worse off. Down size if that is what you need to do. Don’t be stupid.
You need to talk to a real financial planner, many or free, or hit up a better suited subreddit group to ask this question, so great folks with great free but informed advice. My advise, immediately: Roll 401K to an IRA; Use that severance to live on; file for unemployment, and start applying for a ton of suitable positions. Get yourself setup on a super tight budget, and cut off all other expenses, and get yourself on a payment plan to wipe that debt out as fast as possible. What some good encouragement, start listing to free iHeartRadio to Dave Ramsey. Best of luck to you.