what are the unemployment compensation amendments of 1992 
the unemployment compensation amendments of 1992 are laws in the united states that allow an employee who loses their job to roll over their employer sponsored retirement savings into a qualified retirement plan such as an individual retirement account ira without tax consequences the provision allowing former employees to do this was included among other amendments to the emergency unemployment compensation act of 1991 which at the time extended emergency unemployment benefits 1understanding the unemployment compensation amendments of 1992under the unemployment compensation amendments of 1992 if you lose your job then your employer is required to provide you with the option of rolling over your retirement savings in a company sponsored plan such as a 401 k to an ira or other qualified retirement plan account that you choose the law allows employees the option of trustee to trustee transfers in a trustee to trustee transfer also called a direct transfer the funds are not paid directly to the account holder nor does the account holder receive a check made payable to the new account instead the two financial institutions facilitate the transfer on your behalf with a trustee to trustee transfer no taxes are withheld from the amount that is transferred also the transfer does not count as a distribution which means that the amount is not considered taxable income 2if you choose to receive the funds in a check then there is a mandatory withholding of 20 of the withdrawal amount that is paid to the internal revenue service irs to cover federal income tax regardless of how much you may ultimately end up owing for example if you effectively only owe 12 at tax time this means you ll have to wait until you file your taxes to get that 8 back 3if you lose your job then withdrawing funds from your employer s retirement plan as a lump sum before you are at least age 59 should be a last resort in addition to tax penalties you will lose part of your nest egg and diminish its power to accrue earnings on a tax deferred basis this could put you significantly behind in saving for retirement special considerationsmost 401 k plan rules state that if you have less than 1 000 in your account then an employer is automatically allowed to cash it out and give the funds to you directly in general if you have 1 000 to 5 000 then your employer will put it in an ira if you don t tell them what to do with the funds some employers allow you to leave your retirement savings in the company s plan even after you have left if you meet a minimum balance requirement typically more than 5 000 in your account 3 but keep in mind that if you leave your account with your old employer then you will no longer be able to contribute to it if you choose to move your retirement savings to an ira then you will have a wider range of investment choices than with the employer s plan typically 401 k s offer several mutual funds ranging from conservative to aggressive from which an employee can choose 4 with an ira most types of investments are available 5