So what should we do? Pull the 401k?
Convert the 401K to an individual IRA.
The 401K requires the permission of the gov. By the time you find out that they are taking them it will be too late to get the money out.
Roll it to an individual IRA now before their plans get any further. They may try and get the IRA's as well but you can withdraw your IRA in a day or less (with penalty and taxes due) but at least it's mostly yours.