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Yahoo
05-05-2025
- Business
- Yahoo
Recently Laid Off? 5 Things To Do Right Now
The onset of the COVID-19 pandemic resulted in a financial rollercoaster that adversely affected the economy, and the ripple effects can still be felt five years later. This has included considerable job layoffs, and if you're part of this group, you're certainly not alone. For You: Read Next: Luckily, there are steps you can take now to get back on track. Here are five things you should do immediately if you get laid off, according to Ramsey Solutions and InCharge Debt Solutions. When a company decides to lay off staff, typically, they will offer severance pay to employees. The amount offered may range from a few weeks to several months and can depend on your seniority and the amount of time you've worked for the company. If you feel like the severance pay you're being offered isn't sufficient, consider consulting with a labor attorney who may be able to help you negotiate better terms. Try This: If you're affected by a layoff, don't delay collecting unemployment insurance benefits. These payments can help you stay afloat and make it easier to pay the bills while you search for a new job. Depending on the amount you've been earning, you may be eligible for benefits by filing a claim with the unemployment insurance program in the state you were working. It's important to note that the maximum weekly benefit amount, the number of weeks you can collect a benefit, and who qualifies for benefits can vary from state to state. A layoff means you might all of a sudden be without a source of consistent income. This means that cutting expenses and aggressively budgeting becomes crucial. Review your bank statements to identify the spending categories you can cut down on and perhaps recurring monthly expenses you can eliminate. If you haven't budgeted before, the old-fashioned pen-and-paper method or a simple Excel spreadsheet may be a good place to start. Side gigs can serve as a financial lifeline in the event of a layoff. Whether it's babysitting, becoming a rideshare driver or food delivery worker, bringing in extra income while you search for a new full-time job will likely be necessary. Additionally, building and maintaining a side gig even while you're working full time can add an extra stream of income and seriously help lessen the financial blow that often comes with a layoff. If you find yourself without a job, updating your resume and optimizing your LinkedIn are two important factors in the job hunt. Recruiters may like to see relevant, up-to-date experience including positive key metrics showcasing the impact you had at each place you've worked. At the same time, having a polished LinkedIn profile may increase your chances of landing interviews and your visibility to hiring managers hunting for potential new hires. More From GOBankingRates Mark Cuban: Trump's Tariffs Will Affect This Class of People the Most How Far $750K Plus Social Security Goes in Retirement in Every US Region How To Get the Most Value From Your Costco Membership in 2025 12 SUVs With the Most Reliable Engines Source Ramsey Solutions, What To Do If You're Laid Off (and How To Prepare) InCharge Debt Solutions, What To Do When You Get Laid Off This article originally appeared on Recently Laid Off? 5 Things To Do Right Now Sign in to access your portfolio
Yahoo
12-04-2025
- Business
- Yahoo
Can I cancel my 401(k) and cash out while employed?
(NewsNation) — It is possible to cancel your 401(k) and cash it out while you're still employed, but it comes at a cost. Andrew Latham, a certified financial planner, told InCharge Debt Solutions, 'Borrowing from a 401(k) can be a tempting option because it provides access to funds quickly and without a credit check. However, borrowing from your 401(k) should be considered carefully due to the potential impact on your long-term retirement savings.' Technically, you can withdraw from your 401(k) plan before you retire, but only under certain circumstances. What is the Rule of 72 in investing? According to Empower, you can withdraw from a workplace retirement plan if: You die or suddenly become disabled Your plan is terminated and isn't replaced You reach 59 1/2 years old You experience a financial hardship If you are under 59 1/2, you typically can't take early withdrawals from your 401(k) employer plan. And, if you are able to withdraw, you could still be responsible for penalties and taxes. Withdrawing funds from your 401(k) before retirement can end up being pretty expensive. Typically, if you take money out before you turn 59 1/2, Empower says you will likely have to owe the following: Federal income taxes that are taxed at your marginal tax rate. A penalty of 10% of the amount you withdrew. Any state income tax that is relevant. Social Security calculator: Figure out your monthly benefits For example, if you are a single person with an income of $75,000, a withdrawal of $25,000 from your 401(k) would cost you $5,500 in federal income taxes. There will also be a 10% penalty, which would be another $2,500 you would need to pay. So, withdrawing $25,000 early would mean you only actually get $17,000 of it in the end. You may also have to pay state income tax depending on what state you live in. There are some instances where you can avoid the 10% penalty fee, according to Empower. However, you won't be able to avoid paying any federal or state income taxes owed on the amount you withdraw early. You can avoid the 10% penalty if: You give birth to a child or adopt a child. In this case, you can withdraw up to $5,000 for each qualified birth or for adoption expenses. You become disabled or you're a beneficiary of someone else's 401(k) who dies. You lost income due to a federally declared disaster. In this case, you can take out up to $22,000. You are in a domestic violence situation. In this case, you can take out $10,000 or 50% of your balance, whichever amount is lower. You have a personal or family emergency. Each individual with a 401(k) can withdraw up to $1,000 each year for these types of emergencies. You take multiple equal, equal payments. You have medical expenses that weren't reimbursed and exceed 7.5% of your annual income after taxes. You're in the military and have been called to active duty. You leave your job during or after the year you turn 55 years old Some employers won't allow you to take money out of your 401(k) while you're still employed with the company. You will need to check with the company that administers your plan to see what your options are. Typically, you will have the option to take out a 401(k) loan, withdraw money due to hardship or do an in-service distribution, according to Yahoo Finance. Social Security stops phone service cuts, will have 'anti-fraud check' If you want to take out a 401(k) loan, you can take a lump sum of your earnings and replace the funds with payments from your paychecks. However, you will have to pay principal and interest in these payments. Some employers will only allow you to take out money if you are experiencing some type of financial hardship. However, other employers could let you borrow money to buy a home, lease a car or fund another large expense, according to Yahoo Finance. If you can show you have an immediate need for funds, you could also take from your 401(k). Some examples of hardship include money to avoid foreclosure on your home and a down payment on your first home. However, if you choose a hardship withdrawal, you won't be able to contribute to your plan for six months. IRS deadline for stimulus checks approaching, here's if you qualify In-service distributions are rare, according to Yahoo Finance, but this can let you roll your assets over into an IRA. But, you will have larger fees and future distributions could be restricted. Before making any decisions on your 401(k) or other retirement plans, you should contact a certified financial advisor. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
