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Does early 401K withdrawal affect disability payments?

Magnolia, TX |

I am currently on LTD benefits while trying to receive SSDI benefits. Medical bills have piled up and I pay 996 per month for cobra. If I withdraw money from my 401k to cover these expenses, will it deduct from the amount I receive from LTD pay?

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Attorney answers 1


Almost certainly not, but you'd have to check the precise terms terms of your LTD plan to be absolutely sure. I have never seen a plan that offset for 401(k) withdrawals, though, with one slight exception - some plans offset for the portion of a 401(k) withdrawal that represents matching funds paid into the account by your employer. Not many plans offset that, even. Many plans offset for defined-benefit pension plan withdrawals (plans that aren't funded by money you paid into an account over the years, but pay you a benefit based only on years served with the company), but most of them specifically state that they do NOT offset 401(k) withdrawals. If you don't have a copy of your LTD plan to check, ask your employer for one. You'll definitely want to have one handy.

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