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My company is going out of business. What happens to my retirement savings account?

What happens to my 401(k) account my company is going out of business? Don’t worry, your account is protected if your company goes bankrupt or is bought by another company.

  • out of business
  • Contact plan administrator

Company has declared bankruptcy and is going out of business

So your employer has declared bankruptcy and is going out of business. Does that leave your 401(k) plan in the dust? Don’t panic. Your 401(k) account is not held by your employer. By federal law, all 401(k) money must be held in trust or in an insurance contract, separate from the employer’s business assets. That means your employer or the company’s creditors cannot lay claim to the money.

As long as your 401(k) contributions have been regularly deposited in the plan by your employer, the money should be safe. By law, employers must deposit 401(k) contributions into the plan within 15 business days after the end of the month in which they withhold your contribution (7 business days for companies with fewer than 100 participants). If your employer didn’t deposit your contribution before declaring bankruptcy, you could lose that month’s contribution. Always check your 401(k) statements to make sure your employer is depositing your contributions in a timely manner. With many plans you can do this instantly online, without waiting for a statement in the mail.

The contributions you have made yourself are always safe. If you’re not yet vested, you may lose your employer matching contributions if the company goes bankrupt. And if the matching contributions are in company stock, those shares will be worthless in the case of a bankruptcy.


Contact Your Company’s Plan Administrator Immediately

If your company declares bankruptcy, contact your company’s plan administrator immediately. Provide them with your updated contact info, so you can continue to receive communications about the plan. If you are unable to reach your plan administrator, contact the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) toll-free at 1-866-444-3272.or go to their website at

If your company is bought or merges with another company, your 401(k) plan may change. Most likely, your 401(k) money will be automatically transferred to the new plan. Make sure you receive a new summary plan description and understand any changes made to your plan, including your investment options. If the new employer terminates the plan, you should transfer your account directly to a rollover IRA (Individual Retirement Account).

Our goal is to change how we think about saving.

I founded NARPP as a non-profit, because I believe that retirement savings should be about people— and making their lives better. Not about assets under management, sales goals and commissions. The process of saving for retirement has become so complex and confusing it is not surprising that people have a hard time figuring out what’s in their best interest.  It doesn’t need to be this way. At NARPP we are committed to simplifying the complex, delivering fair and transparent investment information, and giving people ownership and control of their retirement savings. Our singular mission is to help you succeed.

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