Need to retrieve all groups and nested groups that a bulk of users from an OU belong to

Slypink I changed your script a little 😉 Ran this on my test Domain Controller:

$total = foreach ($user in Get-ADUser -Filter * -SearchBase "DC=test,DC=local" | Sort-Object Name) {
    $groups = (Get-ADUser -SearchScope Base -SearchBase $user.DistinguishedName -Filter * -Property msds-memberOfTransitive | Select-Object msds-memberOfTransitive).'msds-memberOfTransitive'
    [PSCustomObject]@{
        SamAccountName = $user.SamAccountName
        Name           = $user.Name
        Groups         = (($groups | Get-ADGroup).name | Sort-Object) -join ';'
    }
}

$total | Export-Csv -Path C:\scripts\Lac-UsersWithGroups.csv -NoTypeInformation -Delimiter ';' -Encoding UTF8

This returns a CSV file containing :

"SamAccountName";"Name";"Groups"
"admin";"Admin Account";"Administrators;Denied RODC Password Replication Group;Domain Admins"
"Administrator";"Administrator";"Administrators;Denied RODC Password Replication Group;Domain Admins;Enterprise Admins;Group Policy Creator Owners;Schema Admins"
"Guest";"Guest";"Guests"
"krbtgt";"krbtgt";"Denied RODC Password Replication Group"
"serviceaccount";"Service Account";""
"user1";"User 1";"Group1;Group2"
"user2";"User 2";"Group1;Group2"
"user3";"User 3";"Group2"
"user.4";"User 4";"Administrators"

Just change the SearchBase and CSV path and you're good to go, let me know if this works out for you!