When will I be able to withdraw if I've been laid off?

[John J.]

My company had layoffs about two weeks ago, and I just got my final paycheck this week. I’ve been trying to withdraw my 401(k) funds daily, especially since they began cutting shifts a few days a week last month, so I haven’t had a full paycheck for a while. Even though I’m applying to jobs every day, I’m still searching for something.

When I log into the portal, it shows that the company hasn't officially marked me as terminated, so I can’t move forward with the withdrawal. Does anyone know when this should update in the system? I’ve reached out to the company but haven’t gotten a response yet.

 

[Marin C]

The timing can vary quite a bit. Some plans outline specific periods like one month or six months. More often than not, though, it's a matter of "whenever HR processes the paperwork," which usually takes a few weeks.

Maybe you could try initiating a pending transaction now to prompt your HR department through the system? Just a thought.

 

[John J.]

The timing can vary quite a bit. Some plans outline specific periods like one month or six months. More often than not, though, it's a matter of "whenever HR processes the paperwork," which usually takes a few weeks.

Maybe you could try initiating a pending transaction now to prompt your HR department through the system? Just a thought.

Thanks for your input. But every time I try, it says they can't handle my request and that I need to reach out to my employer.

 

[Johan De Silva]

Absolutely, your contributions to your 401(k) are yours to keep, regardless of whether you're still employed there or how your job ended—be it through a layoff, termination, or resignation. However, the company's contributions might not fully belong to you yet. Some employers have "vesting" periods, meaning they add extra funds over time, but you only get full ownership after working there for a certain number of years. This practice is more common with stock options than with 401(k) contributions, but your specific 401(k) policy will have the details.

Once you leave the company, you have options. You can continue using their brokerage account to manage and adjust your investments, or you can roll over your 401(k) into a brokerage firm of your choice. Rolling it over doesn't cost anything and can provide you with a wider range of investment opportunities because employer-sponsored plans usually offer a limited selection.

I wish you the best of luck. Losing a job is always challenging. From my 40 years in the tech industry, I've learned that no job is ever truly permanent.