What happens to your 401k when a company goes bankrupt or is bought out?
Jan Meriss Alfonso Assistant at Ascent Law LLC ERISA protects your 401k assets against bankruptcy. It also ensures that your contributions are vested so that they don't get commingled with your employer's assets. It also ensures that your beneficiaries are informed of your 401k plan's status. ERISA protects 401k savings from bankruptcies Your 401k is protected by federal law, which is called ERISA. The Employee Retirement Income Security Act requires companies to properly fund their pension plans and keep the funds separate from business assets. This way, they can't be seized by creditors if a company files for bankruptcy. The law also gives you the right to roll over your distributions to another qualified retirement plan. However, if your plan has a non-qualified designation, judgment creditors can seize your funds. Also, your state may have less-stringent laws that provide less protection for your money. 401k contributions are subject to a vesting schedule When a c...