Not sure if need clarification, not understanding about these matters.

It is better to ask this question to your bankruptcy attorney. Thanks for using webanswers!

It will depend on which state you live in as each state's rules regarding 401k disbursements and unemployment vary. Either one of two situations would happen:

One is that the portion of the 401K which the employer contributed will be used in a formula to reduce your unemployment benefit. This will depend on how much they contributed during the base year and what formula the state unemployment agency is using.

Usually in that situation, there may be delays in getting your unemployment as it makes the process more complicated. If you directly roll the 401k over without cashing it first, there will be less problems. Otherwise you will have to prove that your rolled over the 401K money.

The other situation is that the state has no rules on this and will not ask you any questions with regards to your 401K or other retirement lump sum payment. In this case, you don't need to worry about your unemployment amount being reduced.

Initiating a rollover shouldn't affect your unemployment benefits. As long as you're following the standard rules, the money is quickly transferred, and untaxed. It never really enters your possession as taxable income. The only way it would disqualify you from unemployment is if you transferred the money permanently to your bank account, or cashed a check, and then began using it as disposable income.

Chances are good that you were given the wrong information. You should still be able to collect unemployment and roll over your 401(k). Verify this with state unemployment representatives to be sure.

If there's any question, you can simply leave the 401(k) alone until you're in a better position. Unless the fees are obscene, it's okay to leave it with the original provider, even if you no longer work for the same company and regular contributions aren't being made anymore. Eventually, it's best to make the transfer so that you can more easily track your money. Keeping your retirement plan on track helps too, but it sounds like you're already thinking ahead in that regard.