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Subject:  how secure is the money in a 401k? Date:  6/2/2013  11:10 AM
Author:  ems79 Number:  25036 of 26128

If I have $1000 on deposit at a bank, and the bank fails, then the government / FDIC will step in and make sure that I have my $1000.

I was looking at my 401K account and got to thinking... what would happen if there were some scandal and Fidelity announced it was insolvent, such as a bank could if too many loans go bad, or every depositor suddenly wants their money back...

I assume there is something equivalent for operations like Fidelity that hold the majority of our citizen's 401Ks? Is that SIPC? Is there a limit to this insurance like FDIC? Or is the model/regulation of 401K operation different from a bank which usually lends out a multiple of its deposits (and hence the reason it could if fail)?

I have my employer 401K with Fidelity and also two IRAs. It's convenient to see all the dollars at a single location, but it occurs to me that it might be like eggs in a single basket. I have no choice with the 401K, but I'm wondering if I would be better off moving the IRAs to another brokerage to spread my risk around.
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