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My wife is worried that if the company I work for goes bankrupt, we lose all the money we put towards the 401k plan.

Legally, the 401k holdings are yours and are not assets of the employer, so if the employer falls apart, neither the employer nor the bankruptcy court can grab the 401k assets to satisfy the creditor.

That being said, employers have been known to (fraudulently) "borrow" the 401k funds and spend them, either as a desperate bid to keep the company afloat or just to steal it. It could also be the case that an employer's "401k-like" plan isn't really a 401k and doesn't qualify for the legal protections that a 401k gets.

2) Can/should I insure against that?

I'm not sure there is any way to buy insurance; the best thing to do is to be vigilant and question the employer and Prudential if there appears to be any funny business. And have a Roth IRA as well as your 401k, so those eggs are spread between baskets.

Good Luck,
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