This has financial implications. You can avoid the 10% surcharge on 401k withdrawls. Really in need of documentation required or what to say.
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T is not laying off solely due to Covid. Covid only caused T to expedite the layoffs since it was in the works with or without Covid. They were planning this downsizing anyway. Although, Covid is good cover for ATT!
Yes, AT&T layoffs are due to COVID. AT&T has made public statements that these layoffs are due to COVID. Further, AT&T has stated they are NOT breaking the law (the WARN Act) by giving employees 14 days notice (instead of 60 days notice the WARN Act requires) because the global pandemic is an unforeseeable business condition in the WARN Act.
It doesn’t matter whether AT&T lay-off is Covid related or not. The 10% penalty waiver has to do which why you made the withdrawal, was it Covid related. If you are laid off (for whatever reason) are you unable to find work because if Covid (no jobs available).
I would recommend (if you absolutely need to withdraw 401k money), just be sure to say it’s due to Covid when you call Fidelity. That way if the IRS come up with temporary distribution code for Box 7 on the 1099R, it will exempt you from the penalty. It, the 1040 for this 2020 tax return might have an extra question you answer, which exempts you from the penalty.
The 10% penalty (if any) is calculated/paid when you submit your taxes next year. There’s a line in 2nd half of 1040 form that adds in the penalty, based on box 7 of 1099 you will receive from Fidelity, or it will be based on a new question that might be added that pertains to withdrawal based on COVID reason.
I was in Retail-(off payroll 8/6) during my initial layoff call (which I recorded), my Local leadership stated “ due to the pandemic and the new ways customers want to shop we have decided to close your locations “. They said it. However- in the official documents I received- those stated “ my position is being eliminated “. Now I know that’s not true, there are still managers in Retail, but in the case of Fidelity or Unemployment, you should definitely say it is COVID related. Fidelity will waive the 10% surcharge (I recommend calling them for your personal situation). I do know many former coworkers who took withdrawals recently and had no issue getting the fee waived. Good luck to you.
OP, withdrawing from 401K should be a last resort - i.e., in order to eat or avoid bankruptcy. Even without 10% penalty, you will have to pay income tax on the withdrawal (and take the hit with your retirement savings).
Not that the reason for layoffs is relevant, but the reason given for surplus activity (i.e., anything beyond fired for cause/misbehavior/bad performance) is "your position is no longer needed."
OP Here: I certainly will talk to Fidelity. What is the reason AT&T has stated internal and external for the layoffs?
If you are going to withdraw from your 401K, I suggest talking to Fidelity instead of getting advice from an anonymous message board.