Again, reading comprehension is apparently your choice, not mine. Here, considering you are too lazy to just type it into google, let me do it for you:

Source 1: https://401kspecialistmag.com/2-ways-furloughs-and-layoffs-could-impact-401k-plans/


Furloughed employees often retain some or all of their benefits, usually remaining active—rather than terminated—participants in their employer-sponsored retirement plans.

“It’s very important for employers, and their plans’ recordkeepers, to understand that a furloughed employee is not a terminated employee,” the brief continues, “and employers should take care to code or flag the furloughed employee’s status appropriately for the plan’s recordkeeper so that a furloughed employee is not mistakenly permitted to take a termination distribution from the plan.”


Source 2: https://www.investopedia.com/ask/answers/169.asp

You should consult with a competent financial advisor or investment professional before taking action on any of the above scenarios.

Source 3: https://www.fool.com/investing/2020/...your-401k.aspx

A furlough is an unpaid leave of absence from work. It's similar to getting fired, in that you don't report to work, you don't get paid, and you may lose some of your benefits.

Thanks... sounds like you can do this based on other’s experience. I understand the tax implications, which is generally better for pretty much everyone, although I would never promote that advice here.

People getting furloughed on the first round, especially if they have been here two years, still have almost this years full pay. Taking the allowed $100K distribution, even without the 10% penalty, will still result in quite an income tax hit. We have no way to know if this same penalty free distribution will be available next year.

Joe

You can assign the tax burden to any of the next 3 years. I highly doubt my next year’s income will amount to even half of what this year will end up being. The $100K disbursement has more pros than cons in my situation. First and foremost, it allowed me to turn right around and pay off the 401k LOAN that I had out, with no further interest on that.

There’s absolutely no tax penalty for what I was referring to... which was rolling your PRAP into IRAs when you’re furloughed.

Wow. I never knew that.
It's now making me rethink my plan to move my 401k to an IRA after retirement to save having to do RMDs from my 401k after I turn 70 1/2.

Did you have an umbrella policy?

you can also move IRA accounts back into an active 401k

This is completely incorrect and could have a big impact on someone toying with this decision. Schwab agent verified this as well a month ago when I called. This is directly off the IRS website.

Q6. When do I have to pay taxes on coronavirus-related distributions?

A6. The distributions generally are included in income ratably over a three-year period, starting with the year in which you receive your distribution. For example, if you receive a $9,000 coronavirus-related distribution in 2020, you would report $3,000 in income on your federal income tax return for each of 2020, 2021, and 2022. However, you have the option of including the entire distribution in your income for the year of the distribution.

https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers

Also, to this point, once recalled you can reverse-roll an IRA into the company 401k.

I’d just add too that when you start a rollover your money will be out of the market for a time. Sometimes 1 - 3 weeks. That may be something to consider in a high volatility time, but I understand the strategic reasons why rolling over may benefit some.

Also, just my feeling on this.. I would be doing some massive downsizing and budget cutting before ever even thinking about any 401k loans or distributions. 401ks and IRAs are the only tax advantaged retirement vehicles us average Joe’s will ever get. Tread lightly on early use of it.

Had I been drinking coffee, I'd have spit it out laughing!