Can former employers withhold money from your 401(k) when you’re laid off?

When you're laid off, you have options to move your 401(k) funds, but one method can lead to complications. Typically, you can roll over your 401(k) to an IRA or directly transfer it to another employer’s plan, both of which are generally free. However, if you leave money behind, your former employer may withhold it to cover any outstanding loans or fees, which can be a significant pitfall. This situation underscores the importance of understanding your options and ensuring all dues are settled before leaving a job to protect your retirement savings.