20 Oct My company went bankrupt. What happens to my 401(k)?

Q. I’m 75 years young and was furloughed because of COVID-19. My company filed for bankruptcy. What does this mean for my 401(k)?
— Out of work

A. You can rest assured that your 401(k) account is safe.

These plans are governed by the Employee Retirement Income Security Act, commonly known as ERISA, said Jody D’Agostini, a certified financial planner with Equitable Advisors/The Falcon Financial Group in Morristown.

“All assets in a 401(k) are mandated to be held separately from the company’s assets in a trust account,” she said. “These funds are not able to be used to pay for business operations, nor can they be accessed by any creditor of theirs or yours.”

The only contributions that might be at risk were any employee contributions that were withheld, but not yet deposited into your account, or any employer match or profit-sharing that might have been made, D’Agostini said.

“I would contact the plan administrator as soon as possible to be sure that they have accurate and up to date contact information for you,” she said. “If you can’t find this, look for a Summary Plan Description that you received in the past. Since you are a terminated employee, you should try to roll it over into an IRA in your own name.”

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This story was originally published on Oct. 20, 2020.

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