If you've recently been laid off from UPS, one of the biggest financial questions you're likely asking is:
“What should I do with my 401(k)?”
For many employees, a 401(k) represents years of hard-earned savings. In the wake of sudden job loss, it may feel tempting to cash it out. But before you make that move, it’s critical to understand the consequences, your alternatives, and how to make the most of your retirement savings.
💸 What Happens to Your UPS 401(k) After a Layoff?
When you're laid off, your 401(k) doesn't disappear. It remains under the plan until you choose to:
Leave it where it is (if the balance is over $5,000)
Roll it over to an IRA or a new employer’s plan
Cash it out
Each option has different tax implications, fees, and long-term effects on your financial health.
⚠️ Why Cashing Out Your 401(k) Is Risky
Cashing out might seem like a lifeline, but here’s what you’re really trading:
Taxes: The IRS will treat the withdrawal as ordinary income. This could push you into a higher tax bracket.
Penalties: If you're under age 59½, expect a 10% early withdrawal penalty on top of your taxes.
Lost Growth: Withdrawing now means giving up years—or even decades—of compound interest.
👉 Example:
If you cash out $50,000, you might only receive around $35,000 after penalties and taxes—and lose future growth that could have doubled or tripled that amount.
🔁 Smarter Option: Rolling Over Your UPS 401(k)
Instead of cashing out, consider rolling your 401(k) into:
An IRA, where you gain more investment choices and potentially lower fees
A new employer’s plan, if you're re-employed and their plan accepts rollovers
Both options help you preserve your retirement funds, avoid penalties, and keep growing your savings tax-deferred.
🧠 What If You Really Need the Money?
If you're in financial crisis and must tap into your 401(k), consider:
Partial withdrawals (only take what you absolutely need)
Hardship withdrawals (which may avoid the 10% penalty but still have tax consequences)
401(k) loans (only available while still employed—likely not an option post-layoff)
Before doing anything, speak with a financial planner. We can help you understand your options and minimize the long-term impact.
🙋♂️ You Don’t Have to Figure This Out Alone
You worked hard to build your UPS 401(k). Don’t let short-term stress jeopardize your long-term security.
📅 Let’s talk. Schedule a complimentary consultation and we’ll walk you through your retirement plan options—penalty-free, stress-free.
Before deciding whether to retain assets in a 401(k) or roll over to an IRA, an investor should consider various factors including, but not limited to, investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions and possession of employer stock. Please view the Investor Alerts section of the FINRA website for additional information.