Unemployment Benefits

• The criteria for receiving unemployment benefits are established by the state in which the person lives. Although criteria vary slightly from state to state, all states reserve benefits for people who were fired from their jobs. In addition, a person receiving benefits must be able to re-enter the workforce and be actively looking for a job. Retired people are not allowed to claim benefits, as they are not seeking a new job.
  
  

Income

• One of the main reasons a person would be disqualified from receiving unemployment benefits is if he is receiving too much income. A person may qualify to receive benefits, but must re-register each time he receives a check. When he re-registers, he will be asked his income for his most recent pay period. If it exceeds the maximum amount for someone able to claim benefits, he will be denied benefits for that period.
  
  

401k

• If a person cashes out all or part of his 401k account, he will be issued a check from the financial institution that holds his account. Cashing out a 401k will not disqualify a person from receiving unemployment benefits. However, the person likely will not be able to claim benefits for the week in which he receives payment of the check, because the amount of money will exceed the maximum income allowed for recipients in that pay period.
  
  

Considerations

• The only way that cashing in a 401k would prevent a person from claiming benefits for an extended period would be if he took cash from the account in installments that coincided with the payment periods of the benefits. In that case, each time the person received a payment, the amount of money he received in that week might exceed the income limit for someone allowed to claim benefits.