Does cashing out 401k interfere in unemployment

It depends on your state's unemployment rules. But it appears that AZ will reduce your employment benefits if you take out money from your 401(k). The advice in the link is to wait until you have exhausted all of your benefits before drawing on your 401(k).

https://www.justanswer.com/employment-law/7lnb9-arizona-unemployment-laws-i-laid-off-year-downsized.html

However, given the financial hardship you are under, it may make financial sense to clear out sources of high interest debt such as a credit card or car as these could outweigh any benefit you may gain by paying the minimum credit card payment, and pushing back on auto loan payments. It would also give you some peace of mind.

As the benefits vary based on the amount of your 401(k) withdraw, it is important that you keep the withdraw to the minimum.

Under the CARES act there is no penalty and you have three years to pay the federal taxes or to put the money back without penalty. Just make sure you withdraw with a direct cause relating to the Coronavirus.

Just realized this was an old post not related to the Coronavirus ??‍