April 02, 2008
Posted by DavidEng
The company I work for is having financial troubles. The company uses Fidelity for its 401k plan. If the company I work for goes under (CHAPTER 11) does my 401k fund go down with it? Or is it safe in Fidelity's hands?
Sign in or register to answer this question
|
Share
April 02, 2008
Posted by DanielleR
( 1 rating )
Federal law protects most, if not all, of an employee's 401k if the company files for bankruptcy. The company cannot use an employee's 401k to pay off company debt. In fact, the Employee Retirement Income Security Act (ERISA) requires that 401k funds be kept in a trust account separate from the company's assets, meaning that a company's creditors cannot touch it either.
The only way you will lose any money is if your company did not deposit your 401k contributions (or the company's matching contributions) before declaring bankruptcy. When a company files for bankruptcy, unpaid workers' salaries have high priority, meaning that they are likely to get paid before other claims, including 401k contributions. If you file a claim for 401k contributions you think you are owed, you will be in a (long) line with the company's other creditors who are demanding payment.
Sign in or register to rate or comment on this answer.
|
Save as Text
|
Save as PDF
|
Print
Comments