• The Unemployment Benefits Amendments of 1992 are laws that allow an employee who has lost a job to transfer their employer-sponsored retirement savings to an individual retirement account (IRA) or other qualified retirement plan without tax implications.
  • Employers should provide employees with the ability to directly transfer to a new account.
  • Because direct transfers are not considered a distribution, the transferred amount is not considered taxable income.
  • Employees who choose to receive funds directly rather than via direct transfer are subject to a mandatory withholding tax of 20% of the withdrawal amount.