{"id":378063,"date":"2026-04-02T09:48:13","date_gmt":"2026-04-02T09:48:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/378063\/"},"modified":"2026-04-02T09:48:13","modified_gmt":"2026-04-02T09:48:13","slug":"should-you-stop-contributing-to-401k-during-layoff","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/378063\/","title":{"rendered":"Should You Stop Contributing To 401(k) During Layoff?"},"content":{"rendered":"

Company-wide layoffs<\/a> amid rising AI spending have been a recurring headline this year.<\/p>\n

One question we see concerned employees asking on social media is, “Should I pull back on my 401(k)<\/a> contributions to have more cash on hand if my company is having massive layoffs?”<\/p>\n

The reality is that it’s more about having a strategy rather than making any quick moves. While having cash on hand during uncertain times can be more valuable than maximizing your retirement saving in the short term, you don’t want to totally sacrifice long-term growth if you don’t have to.<\/p>\n

If you anticipate possibly losing your job and you want to play it safe, here’s some advice.<\/p>\n

Should you stop contributing to 401(k) during layoff?<\/p>\n

You can diversify your portfolio with precious metals through these gold IRAs<\/p>\n

Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.<\/p>\n

\"\"<\/p>\n

Initial Purchase Requirements<\/p>\n

Minimum initial purchase requirement of $25,000<\/p>\n

Minimum initial purchase requirement of $25,000<\/p>\n

Account set-up fee of $50. Storage fees of $100 or $150 depending on storage type. Annual account administration fee of $125.<\/p>\n

When it makes sense to pull back<\/p>\n

Your first step of action is calculating how much emergency savings you have.<\/p>\n

“If you don’t have the current self stable with short-term volatility, such as a layoff, then that needs to be the priority,” says Autumn Knutson<\/a>, a Tulsa, OK-based CFP and founder of Styled Wealth<\/a>, who doesn’t endorse any particular products mentioned in this article.<\/p>\n

In this case of uncertainty, you should lower your 401(k) contributions temporarily if you don’t have a solid emergency fund<\/a>, which is defined as three to six months of essential living expenses. That cash can then be redirected into a high-yield savings account<\/a> where your money is safe, accessible and offers a somewhat decent return. This way, you’re boosting the cash you have on hand to buy time and reducing stress if layoffs do end up happening.<\/p>\n

Knutson also adds that you can make up for the pause by contributing at a higher rate once your income is stable again. So, reduce how much you put into your 401(k) just enough to increase your monthly income and reassess in a couple months when you have a better idea of layoffs.<\/p>\n

Compare the top high-yield savings accountsWhen you shouldn’t reduce contributions<\/p>\n

If you already have a solid amount of emergency savings in place while worried about layoffs, it’s worth still contributing to your 401(k) \u2014 this is especially true if your employer offers a match<\/a>. A 401(k) employer match is essentially free money, so, at a minimum, contribute enough to earn that full match.<\/p>\n

“That match is great for your future self,” Knutson adds.<\/p>\n

The case for adding a Roth IRA<\/p>\n

If the latter fits your situation \u2014 you’re worried about layoffs, but you have short-term savings and can still contribute enough to your 401(k) to meet your match \u2014 there’s a good argument for adding a Roth IRA<\/a> to the mix. Cap your 401(k) contribution at the match amount then take any extra cash you were contributing and open a Roth IRA to supplement your retirement savings.<\/p>\n

A Roth IRA operates differently from a 401(k) in that you’re contributing after-tax dollars so your money grows tax-free. IRAs in general tend to have more investment fund options than 401(k)s, too. A Roth IRA also gives you flexibility in uncertain times since you can withdraw your contributions (not earnings) at any time without taxes or penalties.<\/p>\n

You can open a Roth IRA at big-name brokerage or through a robo-advisor<\/a>:<\/p>\n

Charles Schwab<\/a>Minimum deposit and balance<\/p>\n

Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One\u00ae\u00a0Brokerage Account. Automated investing through Schwab Intelligent Portfolios\u00ae requires a $5,000 minimum deposit<\/p>\n

Fees<\/p>\n

Fees may vary depending on the investment vehicle selected. Schwab One\u00ae\u00a0Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract<\/p>\n

BonusInvestment vehicles<\/p>\n

Robo-advisor: Schwab Intelligent Portfolios\u00ae and Schwab Intelligent Portfolios Premium\u2122 IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account\u00ae (PCRA) Brokerage and trading: Schwab One\u00ae\u00a0Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account\u2122, Schwab Organization Account and Schwab Trading Powered by Ameritrade\u2122<\/p>\n

Investment options<\/p>\n

Stocks, bonds, mutual funds, CDs and ETFs<\/p>\n

Educational resources<\/p>\n

Extensive retirement planning tools<\/p>\n

Pros$0 minimum deposit for active investingNo commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual fundsOffers extensive retirement planning toolsUsers can get on-demand advice from a professional advisor\/Schwab expertRobo-advisor Schwab Intelligent Portfolios\u00ae available as a no-fee automated service option (with Premium version available for a fee)Award-winning thinkorswim\u00ae\u00a0trading platforms and all their cutting-edge tools are now available at Schwab.24\/7 customer support access by phone or chatCharles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person supportConsSpecific transactions may require commission feeRobo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goalsFidelity Investments<\/a>Minimum deposit and balance<\/p>\n

Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go\u00ae\u00a0account, but minimum $10 balance for robo-advisor to start investing<\/p>\n

Fees<\/p>\n

Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go\u00ae has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)<\/p>\n

BonusInvestment vehicles<\/p>\n

Robo-advisor: Fidelity Go\u00ae IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other:\u00a0Fidelity Investments 529 College Savings; Fidelity HSA\u00ae<\/p>\n

Investment options<\/p>\n

Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares<\/p>\n

Educational resources<\/p>\n

Extensive tools and industry-leading, in-depth research from 20-plus independent providers<\/p>\n

ProsNo commission fees for stock, ETF, options tradesNo transaction fees for over 3,400 mutual fundsLimited-time special offersAbundant educational tools and resources24\/7 customer serviceOver 100 brick-and-mortar branches across the U.S. for face-to-face supportConsFidelity Go\u00ae has a 0.35% advisory fee per year for balances of $25,000 and overSome of Fidelity’s mutual funds require reaching specific thresholdsReports of platform outages during heavy trading daysBetterment<\/a>Minimum deposit and balance<\/p>\n

Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn’t require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.<\/p>\n

Fees<\/p>\n

Fees may vary depending on the investment vehicle selected, account balances, etc. Click here<\/a> for details.<\/p>\n

Investment vehiclesInvestment options<\/p>\n

Stocks, bonds, ETFs and cash<\/p>\n

Educational resources<\/p>\n

Betterment offers retirement and other education materials<\/p>\n

Terms apply. Does not apply to crypto asset portfolios.<\/p>\n

ProsNo trade or transfer feesGood for automated investingCustomizes users’ portfolios around their financial goals, timeline and risk toleranceUsers can assign specific investing goals (short- and long-term) to each portfolio and invest using different strategies (less and more risk)Quick and easy to set up accountAble to sync external retirement accounts to your Betterment retirement goal so all your accounts are in one place. Premium plan users get unlimited access to a financial advisor (otherwise, one-time advisor consultations cost a fee ranging from $299 to $399)Advanced features include automatic rebalancing, tax-saving strategies and socially responsible investingConsBase price for investing accounts is $4\/month – recurring monthly deposits totaling $250, or total Betterment account balances reaching $20,000, automatically switch you to an annual price of .25% of your investing account balances Premium plan requires $100,000 minimum balance<\/p>\n

Subscribe to the CNBC Select Newsletter!<\/p>\n

Money matters \u2014\u00a0so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox.\u00a0Sign up here<\/a>.<\/p>\n

Meet our experts<\/p>\n

At\u00a0CNBC Select<\/a>, we work with experts who have specialized knowledge and authority based on relevant training and\/or experience. For this story, we interviewed\u00a0Autumn Knutson<\/a>, certified financial planner and founder at Styled Wealth<\/a>, a fee-only RIA serving impact-driven people.<\/p>\n

Why trust CNBC Select?<\/p>\n

At CNBC Select<\/a>, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every investing article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of investment products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.<\/p>\n

Catch up on CNBC Select’s in-depth coverage of\u00a0credit cards<\/a>,\u00a0banking<\/a>\u00a0and\u00a0money<\/a>, and follow us on\u00a0TikTok<\/a>,\u00a0Facebook<\/a>,\u00a0Instagram<\/a>\u00a0and\u00a0X<\/a>\u00a0to stay up to date.<\/p>\n

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff\u2019s alone, and have not been reviewed, approved or otherwise endorsed by any third party.<\/p>\n