401k and employer Bankruptcy

I hope none of your funds were in the company stock. That's likely gone. The rest should be fine, the employer should have nothing to do with it, the funds are supposed to be sent to the custodian (i.e. broker) within X days of the pay cycle. You should contact the Broker directly and you may decide to transfer the funds directly to an IRA. (Worst case - one or two deposits were 'lost' before getting to the custodian. This shouldn't happen, but that's the tougher money to get back, if it did) JOE

The 401K money becomes yours when it is set aside. The employer is supposed to send a check every so often to the plan administrator every so often. It is your duty to verify that those payments are credited to your account.

If the employer goes toes up, the worst that should happen is you lose you most rent contributions for up to maybe

45 days. If the employer has been failing to send in checks beyond that, you should have noticed that your account was not being credited, and you should have spoken up.

If you have cone a roll-over to an IRA, then the employer is out of the picture, and you are totally safe. If you kept the 401K with the employers plan after you retired, your only risk would be that some payments were not sent in. Again, that would be your job to verify that everything was credited to your account.

Some employers get into the habit of being late in sending in 401K payments, or totally fail to do so when they get into financial problems. Again, it is your job to watch for this, and decide what action to take. I usually suggest getting out before the company goes under. That way, you are first in line to get your paycheck, vacation, and retirement plans straightened around. I don't want to be there unexpectedly jobless and then not know if I will every see my last paycheck, back vacation pay, and then have lost 9 months of 401K contributions.

-john-

Jane,

In addition to the other guys comments, you may have some trouble with any employer-matching contributions that have not yet been paid or have been paid but not fully vested. It varies on a case-by-case basis so its hard to know for sure.

However, if you are retired there is less likely to be an issue with this, but it is possible (especially if you retired very recently).

Good luck.

In addition to others's comments, if you are retired, you should consider rolling your 401K into a rollover IRA, whether your employer is in trouble or not.

That is a really good point. But the cynical streak in me wants to say that after all the Enron publicity, anyone who holds a non-trivial amount of their retirement in company stock more or less deserves all the bad things that might happen to them. It is hard to have much sympathy after hearing about Enron year after year.

-john-

Notice the OP said "IF".