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Labor Department: $300/week unemployment enhancement may not start for 'several weeks'

Unemployed Americans may see a lag in enhanced unemployment benefits, depending on where they live.

People wait in line at the Holy Apostles Soup Kitchen on Dec. 15, 2020 in New York City.
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Out-of-work Americans counting on $300 weekly enhanced unemployment benefits approved under President Joe Biden's $1.9 trillion American Rescue Plan Act may not get that aid until mid-April or later, the Labor Department announced Monday.

Biden's Covid-19 relief bill extended enhanced unemployment benefits until September 6, providing $300 per week in extra aid, on top of the unemployment benefits states already pay.

But states will need several weeks to "modify their computer systems to accommodate the extensions," Suzan LeVine, principal deputy assistant secretary at the Labor Department's Employment and Training Administration, wrote in the memo.

The American Rescue Plan Act also approved the extension of the Pandemic Unemployment Assistance program for the self-employed, gig workers, and part-timers, as well as the Pandemic Emergency Unemployment Compensation program, which continues unemployment for people who exhaust their regular state benefits. Both of those programs will continue until September 6.

Biden signed the American Rescue Plan Act into law on March 11, just days before enhanced unemployment benefits were set to expire on March 14.

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Whether or not the benefits are delayed will likely depend on what state you live in. "The Department expects many states will need until the middle of April or later to implement the new provisions and begin notifying individuals," LeVine wrote.

The extension of benefits amounts to $7,500 in extra unemployment insurance per individual for the 25 weeks between March 14 and September 6, in addition to state unemployment benefits. That's money the 20 million Americans who were out of work as of late February desperately need.

If you experience a lag in enhanced unemployment benefits, here are some tips for maintaining financial security, according to a certified financial planner.

Communicate with landlords or creditors

If you are counting on enhanced unemployment benefits to pay bills, "be proactive," says Doug Boneparth, a CFP and president of Bone Fide Wealth in New York City. He suggests reaching out to mortgage companies, landlords, or creditors to let them know if you're facing financial hardship.

"The good news is, I think a lot of companies are already quite aware of the fact that people are hurting and have created programs to help with that," says Boneparth.

Major banks, including Capital One, Chase, Citi, and Wells Fargo, have been encouraging customers facing economic hardship to enroll in payment assistance programs. Here are some other resources for help with student loans, utility bills, rent, and food.

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Borrow from long-term assets when necessary

If you're dealing with a loss of income, it could be smart to save some of your stimulus money to help pay your bills in the interim. Suze Orman, bestselling author of "The Money Class" and host of the "Women & Money" podcast, recommends using your $1,400 check to pay for necessities and putting any remaining cash in a savings account for emergencies.

In a worst-case scenario, if you're really struggling to pay for necessities like food or living costs, it's OK to borrow from long-term savings accounts like a 401(k), 403(b), or individual retirement account, Boneparth says.

Last year, people under the age of 59½ were allowed a coronavirus-related distribution of up to $100,000 without the typical 10% early distribution penalty. They have a three-year window to pay income tax on that withdrawal or replace the withdrawn money to avoid taxes.

For 2021, the same relief hasn't been issued. So keep in mind if you do borrow from a retirement account, you could pay a hefty fee. Plus, you'll lose out on the power of compounding that money for your future goals.

Contact your local representatives

If your state delays the distribution of enhanced unemployment benefits, "reach out to your elected officials," Boneparth says. "I know a lot of people might think, 'What good is that going to do?' But quite frankly, it has the potential to move things along."

Lobbying for the state to update its systems quickly isn't a guaranteed solution, but it's a way to hold elected officials accountable, Boneparth says. "It might not put a dollar in your pocket any sooner, but it might make you feel better that you did something."

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