Withholding law hits retirement payouts. (Human Resources)

Retirees, newly laid-off workers and employees who change jobs could lose 20 cents of every dollar in their employer-sponsored retirement plans if they fail to plan for the change in job status.

A new law requires employers to withhold 20 percent of lump-sum distributions and most other distributions from a company retirement plan, including in-service withdrawals.

The 20-percent withholding requirement, which went into effect Jan. 1, is one small part of legislation approved last summer to extend unemployment benefits beyond six months. "Hardship" withdrawals from 401(k) plans, which are allowed for medical emergencies and other crises, also will be subject to the …