Lay off and 403B

After working for the LAUSD for 13 years, I'm facing a lay off.

I don't own a home and I had just put a deposit on one when I found out about my pending lay off.....thank God I was able to get that back.

Unemployment won't even pay my rent....don't fancy living in my car(s), especially with 2 dogs, 4 cats and my GF....so, I'm forced to cash out my 403B and relocate to a state where I could actually afford to live.

I have family and friends in Cedar City, UT and have always wanted to live there (my parents and a nephew are buried there) but, stayed here because I finally had a job that I was going to see a retirement from.....yeah, right!

Okay, where am I going with this?

Cashing out my 403B early is really going to sting and from what I've been hearing I could stand to loose as much as 40% or more!......Jeez, kick a guy when he's down.

Are any of you tax savy and know of any way of minimizing the impact?

Getting kinda of nervous.....I'll most likely be out of a job by around August.

Any and all suggestions appreciated.

Hans

When I got laid off, I had to cash out my 401k and got hit pretty heavy at tax time. Best advice I can give is to be poor with dependents. I got most of my tax back afterwards...

Hans, I've got a really good CPA friend I can hit up for you if you need it. She's a partner at a large firm (who in fact has handled Naxja's taxes a couple of times). Catch me back channel and we'll talk more details.

What cal said.

IIRC, a 403(b) is treated like a 401(k). Early withdrawals get taxed immediately, probably at the gift rates, plus an additional 10% penalty. From what I've heard, there's really no way around it if you take it as a distribution.

If you can, you might want to see about taking a loan against it if your plan allows it. Be aware that it really is treated as a loan that you pay back to yourself. If you default, it gets treated as a distribution and you will get dinged for it.

Yep, if your taxed at 35%, your draw is treated as taxable income. Plus the great 10% penalty on top of the withdrawn money.

That sucks man, Wish you the best.

I would wait.My friends works for them to and he has been told this every year and he still has his job with them(They have been doing this for what, the last 10 years now).Don't jump the gun yet.After all we know when they say let the voters vote on the tax hikes, they always pass them.LOL.Even if we don't vote yes on them they pass by 56 or 58%, funny how that is.

I'd wait too. My wife's a teacher, so we know the precarious feeling you teachers often face...

I think pulling your 403(b) out is something that'll solve a short-term cash problem, but is something you'll regret.

I'm sure you'll make the right choice, for you, though, so good luck with that! It'll all turn out ok in the end. It's been my experience that one thing ending is just the beginning of the next chapter. Having been on unemployment myself at one point, it's TOTALLY stressful and hard, but I stuck with my faith, was prayerful, sucked up my pride and did my best to search out my next career. I've found out 4 years later that it was the best thing that could have happened to me...I truly love my current job.

If it comes to it, take a loan out on your retirement plan and hunker down and live frugally until you find other work. The cost of moving would eat up most of your money. Good luck brother.

i wouldnt get too extreme just yet. things always work out if you have a good head on your shoulders and work hard. there are other jobs out there, good companies are always looking to hire. the unemployment rate is high, but i'm fairly certain that a lot of those people are either not looking for a job, or aren't anything to write home about in regards to ability or work ethics. Not everyone, but i'd bet most.
You have a solid work background if you've been employed by the same company for the last 13 years. That makes you somewhat desirable, and will give you an edge. You also work for someone who has a history of layoffs and threats of it, so i don't think being unemployed will work against you as much as for other people. I think most people see the school drama all over the news and have an idea what's going on.
In short, don't stress out, it gets you nowhere. don't make any hasty decisions, anxiety will put you in positions you're better off not being in. Remember that you're worth something and dont let anyone take advantage of your layoff when looking for a yob.
what do you do, anyways? teach, or something else?

I really wish I had another choice.
I'm not a teacher....they always seem to make out okay.

I'm a tradesman, a sheetmetal worker in the maintenance branch and this is round two of the cuts....a couple of welder buddies of mine (as well as others) were laid off in the first round of cuts.

I've been a union sheetmetal mechanic for close to thirty years and I checked in with my local and there are close to 1,000 on the out of work list (in my local alone!).....called the international (covers entire country and Canada) and it's no better.

Taking a non union job (even those are hard to come by) I'd be lucky to get half of what I made, not enough to live on (here) and getting rid of my animals is NOT an option.

There are over 500 layoffs slated, all based on seniority....our machinist, who has 28 years is gone as well so, yeah this is happening.....they want to eliminate maitenance entirely so that they can contract everything out and not have to pay benefits etc....

What angers me is, we're getting laid off but, the big wigs that initiated this genecide recieved huge raises!

We're barley 1% of the entire budget but, laying us off is going to save the district (?)

Now they'll be bringing who knows what onto the campuses....you think they'd be a little more careful after all the sex scandals and all......and the schools will go to shit but, they'll still have their big paying jobs.

Thanks to all who responded with encouragement and kind words, I'll be able to make it with what I'll have left (won't be as big a cushion, though) and in another year and a half (when I turn 55) I'll start drawing my pension, which wouldn't do me any good here but, would be plenty for an under $300 a month mortgage in Cedar.

Cal, I might take you up on that.....got to talk to few people first.

Hey, you never know....I could always win the lottery!

Hans

Damn it Hans!!! Its beautiful up there though and you love the outdoors........ We'll miss you but the way California is going, you are getting a jump on the rest of us who aren't bright enough to let this place sink on its own. Good luck my friend.

sheetmetal mechanic as in operating brake presses, shears, etc? anything else, like punches or lasers? any machining experience?
i dont know how much you need to make, but there are tons of manufacturing jobs out there. dont bother looking for a union shop though, and i probably wouldnt even mention it durring job interviews.
i've been in manufacturing my whole working life, and now i own a small shop. i can tell you that all the metal supply companies i use have been pretty busy over the last year or so, things have been picking up.

Vanimal said:

sheetmetal mechanic as in operating brake presses, shears, etc? anything else, like punches or lasers? any machining experience?
i dont know how much you need to make, but there are tons of manufacturing jobs out there. dont bother looking for a union shop though, and i probably wouldnt even mention it durring job interviews.
i've been in manufacturing my whole working life, and now i own a small shop. i can tell you that all the metal supply companies i use have been pretty busy over the last year or so, things have been picking up.

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I pretty much do it all, architectural, HVAC, custom, gutters, flashings, kitchen and weld some......I came out number one when I tested for the position with LAUSD (out of over 100 applicants) and was the top producing sheetmetal guy (service/repair calls) in the entire district but.....that dosen't mean squat.

I figure I can find some kind of work in Cedar, hell I don't even care if it's in sheetmetal...."what kind of drink would you like with that combo?"

silverslk said:

Damn it Hans!!! Its beautiful up there though and you love the outdoors........ We'll miss you but the way California is going, you are getting a jump on the rest of us who aren't bright enough to let this place sink on its own. Good luck my friend.

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Thanks, Andy

I'm kind of looking forward to leaving this liberal stronghold anyway but, I will have to come back every now and then to run some of my favorite Western Sierra trails.....this time in my XJ!
It's changed quite a bit since the last time I saw you.....still got your Bronco?

Hans

Oh, crap, sorry...i just saw school district and assumed union teacher. My bad. Everything OTHER than that in my post is from personal experience, tho, so like vanimal was saying, you really do have a solid background, so i think this is likely going to bring nothing but good to your life.

Definitely going to pray for you, your efforts and for success in chosing the right path, if you don't mind...

Cheers, bro.

SanDiegoOverland said:

Oh, crap, sorry...i just saw school district and assumed union teacher. My bad. Everything OTHER than that in my post is from personal experience, tho, so like vanimal was saying, you really do have a solid background, so i think this is likely going to bring nothing but good to your life.

Definitely going to pray for you, your efforts and for success in chosing the right path, if you don't mind...

Cheers, bro.

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Very much appreciated

Hans

Oatmeal said:

Thanks, Andy

I'm kind of looking forward to leaving this liberal stronghold anyway but, I will have to come back every now and then to run some of my favorite Western Sierra trails.....this time in my XJ!
It's changed quite a bit since the last time I saw you.....still got your Bronco?

Hans

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Yep!! Its got 35's, front glass, Cut and Turned beams.... Have some 3.5 over beams to go on and need to get some 2.5"x12" shocks for out back before our August Bronco trip to Baja.

silverslk said:

Yep!! Its got 35's, front glass, Cut and Turned beams.... Have some 3.5 over beams to go on and need to get some 2.5"x12" shocks for out back before our August Bronco trip to Baja.

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You go fast guys! :laugh:
You've never seen my Bronco, huh....it's a '69 that I've had for about 26 years now.

I could tell you when, where and how every dent (uh....trail trophy) occured

Hans

I'll have to see it before you leave!!

Just thought I'd give you guys an update on my situation.....I was officially laid off July 25th.

I took some of my 403B money and am putting it down on a beautiful 4br, 2ba 5 yr old home in Cedar City.
My unemployment will easily cover the $500 a month mortgage (tax and ins. included) and other living expenses until I can find employment or, if I still haven't found a job when my benefits run out, I'll be able to draw my pension (I'll be 55 in 2014) and still be fine.

The guy that implemented all these layoffs is under investigation for misappropriation of funds.....seemed he was taking maintenance money (money that was slated for our positions) and was using it to fund his own pet projects, thereby creating a false deficit and costing us our jobs. However, the district, I'm sure, will try and sweep it under the rug to avoid media exposure......I am seriously considering a letter to the Daily News, LA Times (liberal bastards) and my union to bring this asshole to light and......the next guy below him, falsified his educational background to get a (extremely high paying) position that he isn't even qualified for.....can you believe this ****!

Anyway, that's what's going on,

Hans