In a significant blow to Ogden, Utah, hundreds of IRS employees are facing layoffs in the coming months. These job cuts are part of a broader strategy spearheaded by President Donald Trump and DOGE to reduce federal spending by slashing the number of federal workers. This dramatic move is leaving many employees uncertain about their future, especially as they face the possibility of having no retirement savings or a secure financial cushion.
One IRS employee, explained how the job loss has altered his financial outlook. At 49 years old, he had only worked for the agency for six months, yet had hoped to retire there. “This was going to be my retirement plan,” he said. “My wife is going to be fired too, so it’s going to affect my entire family.”
The layoffs, though unfortunate, are not isolated to Ogden or the IRS alone. The federal government has already laid off an estimated 30,000 workers, with more cuts expected. The federal sector has historically been seen as a stable source of employment, offering decent salaries, excellent benefits, and strong job protections.
Federal employees are usually only dismissed for cause, unlike private-sector employees who can be let go for almost any reason. This sense of stability has made federal employment attractive to many. However, with this new wave of job cuts, even federal workers are left vulnerable.
Impact on Local Community and Economy
The IRS processing facility in Ogden is one of the largest in the country, and the layoffs are expected to have a significant impact on the local economy. The city of Ogden, which relies heavily on the IRS facility for jobs, is now grappling with how to support these displaced workers.
Ben Nadolski, the mayor of Ogden, expressed his commitment to helping those affected by the layoffs. “They are a fabric of our community,” he told KUTV. Nadolski and his team are working hard to connect laid-off employees with resources that may help them through this tough time.
Despite the financial hardship these layoffs will cause, employees can take steps to protect their financial futures, particularly their retirement savings.
Steps to Protect Your Retirement Savings After a Layoff
Layoffs can be a major disruptor, especially for employees who are just beginning to plan for retirement or who are relying on their current job for their retirement plans. Here are a few practical steps to help you stay on track with your retirement savings, even after an unexpected layoff:
- Do Not Withdraw from Your Retirement Accounts
One of the most common mistakes people make after losing their jobs is withdrawing money from their retirement savings accounts. This can be tempting, especially when faced with immediate financial concerns. However, tapping into your 401(k) or IRA can have long-term consequences. Not only will you likely face steep tax penalties, but you could also lose out on the potential growth of your savings. For example, if you withdraw funds at a young age, you may not only pay taxes but also incur a 10% early withdrawal penalty. Instead, keep your retirement savings intact for the future. - Apply for Unemployment and Negotiate a Severance Package
After a layoff, it’s crucial to apply for unemployment benefits. This can help you cover your living expenses while you search for a new job. While not all federal workers are eligible for severance packages, private-sector employees are often offered these packages as a form of financial support during the transition. If you do not have a severance package available, consider negotiating with your employer to ensure that you are financially supported during your job search. - Consider Rolling Over Your Retirement Savings Into an IRA
When you leave a job, especially if you’ve built up a retirement savings account such as a 401(k), it’s essential to decide what to do with your funds. If you’re concerned about losing control or incurring high fees with your current 401(k), rolling over your savings into an Individual Retirement Account (IRA) can be a smart choice. This move keeps your retirement funds growing tax-deferred and gives you more control over your investments. Moreover, rolling over your 401(k) doesn’t incur tax penalties as long as it’s done correctly, ensuring that your retirement savings can continue to grow. - Consider Taking Emergency Withdrawals, but Be Cautious
New IRS rules allow you to withdraw up to $1,000 from your retirement savings without facing tax penalties. If you’re in a pinch, this may seem like an easy way to cover expenses between jobs. However, consider this option only as a last resort. Even small withdrawals can have a significant impact on your retirement savings over time. The $1,000 you take out now might seem like a necessity, but in 10 years, with a conservative return of 8% per year, that amount could have grown into over $2,000. - Get Back on Track Once You Secure a New Job
Once you land your next job, don’t forget to start contributing to your retirement savings again. Even if your new employer doesn’t offer a 401(k) plan, you can still open an IRA and continue saving for the future. Small, regular contributions can add up over time, and the earlier you start, the more beneficial compounding growth will be. Additionally, if your new job does offer retirement savings plans, ensure that you take full advantage of employer contributions.
Taking Control of Your Financial Future
Layoffs are undeniably tough, especially when they threaten long-term financial plans like retirement. For employees facing unexpected job losses, the key to protecting your financial future is to stay informed and make thoughtful decisions. By maintaining your retirement savings, exploring your options for unemployment and severance, and being strategic with your investments, you can weather the storm and emerge stronger.
The IRS layoffs in Ogden, Utah, are a sobering reminder of how quickly the security of a job can change. But with the right steps, you can ensure that your financial future remains bright, even during periods of uncertainty. Whether you’re facing a layoff or want to safeguard your retirement, taking action now can help you stay on track for a stable and secure future.
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