For Indiana's Department of Workforce Development, they do require you to report any 401K amount you will receive when you file a claim. They also require you to report any changes.

You are not really getting penalized for it because they will only base it on the amount the employer contributed and not what you contributed. Keep in mind that some employers have a vested clause regarding the 401K as well.

The exact statement is "If you are receiving a pension or 401K payment, has the amount of the payment or distribution changed since you filed your initial claim or last weekly claim.

If your did receive a 401K withdrawal distribution in which your employer has contributed, they will adjust your unemployment benefit by a small amount. It will be a bit lower but nothing major. Here's an example, a person received a distribution of $11,000 and their benefit was reduced by twelve dollars a week.

You must report it as you have to sign or verify each week that the information you provide is accurate otherwise you can suffer fines or imprisonment.