Industry layoffs could impact retirement plans
The recent announcement of significant layoffs at the IRS office in Ogden, Utah, has left many employees, including those nearing retirement, facing uncertainty about their financial futures. The Ogden facility, one of the nation's largest processing centers, is a cornerstone of the local economy.
Ben Nadolski, Ogden’s mayor, emphasized the community's commitment to supporting affected workers, calling them “a fabric of our community.” Nadolski told KUTV he had a team in the building working on connecting those impacted with resources.
The Trump administration has already cut an estimated 30,000 federal workers, and more cuts are expected. Federal and state government jobs are often seen as stable employers with generous benefits. While the salary rate is often lower than that of the private sector, federal employees have strong job protections.
While many private sector jobs are “at will,” meaning employers can fire employees for any reason, government workers have a right to due process. They can only be fired “for cause” after their initial probationary period ends. Those protections make federal jobs attractive for many workers.
For the thousands of IRS workers and others facing unexpected layoffs, however, the financial impact — especially on retirement savings — can be significant.
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Explore better ratesKeep your retirement savings on track after a layoff
The federal government isn't the only employer laying off workers. Amazon, Stripe, Meta, Wayfair, and Starbucks have all reported layoffs in 2025. Layoffs can be disruptive to retirement savings, even for those decades away from retiring. Here are a few steps to keep your retirement savings on track.
Don’t remove retirement savings from retirement accounts. if possible. It can be tempting to tap retirement savings after a layoff, but it can have a long-term impact on your ability to retire. Withdrawing funds from retirement accounts can lead to significant tax liabilities and penalties. It also disrupts the long-term growth potential of your savings. Avoid withdrawing money from retirement accounts for as long as possible.
Instead, make sure to apply for unemployment and try to negotiate a severance package. While less common for federal workers, private employers may be willing to extend benefits or offer severance pay.
Consider rolling retirement savings over into an IRA. If you currently have a 401(k), consider rolling your savings into an Individual Retirement Account (IRA) or a new employer's retirement plan, which allows your investments to continue growing tax-deferred. Rolling over, rather than withdrawing, doesn’t create a taxable event or require you to pay a penalty.
This move can provide more control over your funds and a broader range of investment options. Having your funds in one account can also reduce administration fees, as you’ll only have one account.
Pull a small amount for emergencies, if you must — but put it back as soon as possible. New IRS rules allow taxpayers to pull up to $1,000 from their retirement savings tax- and penalty-free. This could help some laid-off workers bridge the gap between jobs. However, that $1,000 could grow exponentially over the years, so put it back as soon as you're able.
Retirement savings rely on compounding growth. Over 10 years, if you leave that $1,000 in investments earning at least 8% returns, you could have more than $2,000.
Keep building. Once you get a new job, get back on track with retirement savings. If you land in a role without access to an employer-sponsored 401(k), you can contribute to an IRA. Regular contributions, even in smaller amounts, can significantly impact your retirement readiness over time.
Layoffs are challenging, especially when they disrupt long-term plans like retirement like it has for IRS workers in Ogden, Utah. By making informed decisions and leveraging available resources, you can navigate the challenge without setting back your retirement goals.
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