Cashing out your 401k should not affect your eligibility for unemployment: the 401 is savings, not income, so taking the distribution from it doesn't affect unemployment benefits. Remember, though, that in addition to having to pay taxes on the 401 money (you tax when it is taken out, whether that is no or in 30 years), you will also have to pay a 10% penalty, because you are taking it out pre-retirement and not for an approved purpose. All in all, you might only pocket around 55% of the cash in the 401, when taxe and penalty are taken into account.