Significance

• You may collect unemployment benefits if you were terminated from employment for a work-connected cause. You may also collect benefits if you quit for work-related reasons such as a significant change in your work agreement or you aren't being paid by your employer for work you actually did. Your benefit payment is paid weekly, but you must be available and ready to work in order to qualify for benefits.
  
  

Benefit

• Hardship withdrawals from your 401k plan due to a job loss are generally not counted against you and should not reduce your unemployment compensation. This means you'll get your retirement benefits plus your unemployment benefits to help pay for your ordinary bills and expenses. This will be beneficial for you when you cannot pay for your normal expenses living on just your unemployment insurance benefit payment.
  
  

Disadvantage

• If you take your 401k plan savings, you'll pay a 10 percent penalty if you're under age 59 1/2. This penalty is assessed by the Internal Revenue Service and applies to all withdrawals made prior to your retirement age. If you retire voluntarily, however, then you won't receive unemployment insurance benefits from the state.
  
  

Consideration

• Consider cashing in your life insurance, drawing on savings outside of your retirement accounts or selling other assets. Alabama normally respects a collateral source rule that allows you to sell assets or cash in insurance policies for its cash value. You may then use this money to supplement your unemployment payment without the sale of the asset affecting your unemployment compensation.