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motolena
Level 1

Unemployment and Inherited IRA RMD Distribution

I am collecting unemployment and want to know if there is a penalty from EDD Unemployment for taking out the RMD amount from my inherited IRA for 2020. I have until 12/31/21 to take out the RMD and need advise on whether to leave it alone and accept the penalty. I don't want to lose my unemployment or have any complications which ends in February 2022. 

Is better to take it out in the following year 2022 and take the penalty cost from not taking it out in 2021? How do I report this to EDD? 

3 Replies
AdamNe
Employee Tax Expert

Unemployment and Inherited IRA RMD Distribution

Hi @motolena 

 

I found one resource for you. Basically, it depends on if you are the sole contributor to the IRA. See section H.1. here: https://www.edd.ca.gov/uibdg/Total_and_Partial_Unemployment_TPU_46055.htm

 

You may want to contact the EDD directly at 1-800-300-5616 to discuss the details of your situation and make determine what the effect will be on your claim. In general, it looks like IRA distributions, when the money was contributed by yourself, may not reduce your benefit in CA. 

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motolena
Level 1

Unemployment and Inherited IRA RMD Distribution

Thanks for your response, Adam.

I inherited this IRA and did not contribute anything. Is there any other resource I can talk to besides EDD?

I'd like to know if anyone else who has been in a similar situation and what they did.

AdamNe
Employee Tax Expert

Unemployment and Inherited IRA RMD Distribution

I would strongly suggest asking the EDD directly, as they have very specific rules about each situation that dictate whether or not a payment from a retirement account affects your weekly benefit. You might even consider asking in writing so that you receive a response in writing. Aside from that, you may seek out an attorney who is well versed in CA EDD regulations in your area. 

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