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There are several things to consider when talking about the safety of your 401K plan/investments. First, and foremost, the assets in your 401k plan are held in a trust - with a trustee, who has a fiduciary obligation to safeguard the assets. The trustee (institutional or individual) is personally liable for breaches of their fiduciary duty - including the duty to safeguard. Now, that manifests itself in a duty to invest the assets with a reliable and trustworthy investment provider, and theoretically, at least, should perform due diligence periodically on the provider's ability to maintain solvency, and ensure a return of the investments/proceeds when necessary. If they don't, well, that would be a breach.

Even if your plan uses Fidelity's trust company as trustee, the trust company is an independent entity from the broker/dealer, investment manager, and distributor that most think of when they say "Fidelity." It is also subject to banking regulators - depending on how it is chartered, which could be state banking regulators, the OCC, and others.

Finally, Fidelity as a custodian of assets in accounts is subject to SEC oversight, and has SIPC and PRIVATE insurance to cover losses as a result of insolvency.

Keep in mind, though, that your investment in "mutual funds" is an investment in separate independent investment companies - distinct from Fidelity itself (even if they carry the name "Fidelity." Fidelity the custodian could go belly up - but you wold retain your interest in the mutual fund itself - although it may be time consuming to get access to your investment (first through the trust, then through the receiver of the corpse of Fidelity).

Suffice it to say, unless you have a fly by night trustee, or a dishonest individual trustee,handling your 401(k), you are pretty well protected....
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