Are 401(k) Retirement Accounts Insured?

For many people, the 401(k) plan is the nest egg that holds the funds for the retirement of their dreams. However, it may come as a surprise to many people that unlike their bank accounts, the value of their 401(k) plan usually isn't backed by insurance. The Federal Deposit Insurance Corporation only covers deposit accounts, like savings accounts and certificates of deposit. That means that if your 401(k) is invested in stocks, bonds or mutual funds, you're not covered against those investments losing value.

If you do have money in your 401(k) invested in deposit accounts, it's only covered by the FDIC up to the maximum coverage limits. As of 2014, the FDIC covers up to $250,000 per person, per bank, per account category. Retirement accounts are a separate category, so any money you have with the same bank in a checking account, savings account or other personal account won't count against that limit.