401 k plan account insured?

[Guest Dan Shea]

This may seem a contrite but I have a client with a self directed 401 k plan (brokerage accouts for some, bank cd accounts for others) its a 401 k with each person choosing own route and broker etc under employers 401 k plan. So with all the market stuff they asked what limit of insurance applies for each type, broker versus bank. I think the bank side is 250,000.00 but all that we have found is that mentioned for ira's keogh's not specific to a FBO 401 k, the broker side seems to be 500,000.00 any help is appreciated.

[JanetM]

FDIC is 100,000 for bank accounts - if investment is in CDs at bank the total in the retirement account is covered to 100,000. Believe the IRA coverage is more.

SIPC - securities investor protection corporation insures participating brokerage firms and cover up to $500,000. But this coverage only is used if the brokerage firm takes the assets from the account and the funds are missing. Not if the market tanks the value goes to zero.

[Guest SWH]

Just wanted to clarify. The retirement plan itself can have deposits with one bank that is over $100k, as long as no person's interest in that bank is over $100. See page 21 and 22 of attached brochure.

FDIC_brochure.pdf