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Chapter 3. How Safe Is Your 401(k) Money... > Safety in Times of Trouble—Creditors... - Pg. 34

How Safe Is Your 401(k) Money? 34 Brokerage firms and investment dealers usually have what is called SIPC insurance. SIPC stands for Securities Investors Protection Corporation and is the equivalent in the brokerage industry to the FDIC (Federal Deposit Insurance Corporation), which covers your bank deposits. When you see "SIPC," it means that your brokerage account is protected up to $100,000 in cash and another $400,000 in securities. However, remember that most 401(k) money is not held in a brokerage account; it is held in a trust. Safety in Times of Trouble--Creditors, Divorce, and Taxes We all have times when stuff happens that we don't like to think about or plan for, like getting a divorce or debts that we can't seem to get paid off. What about your 401(k) money in such times? Read on. Creditors A 401(k) plan is a great place to hide your money, even if you're having money problems. That's because federal laws prohibit what is called "alienation of benefits." This rule states that creditors can't tap into your 401(k). And, even if you wanted to assign your 401(k) account to your brother- in-law for the money you owe him, you can't. This law is very important, and it has protected millions of Americans from allowing a bad situation (bankruptcy or overuse of credit cards) to become even worse--the worse situation being not having enough money to retire. Congress--yup, those guys and gals who are supposed to be looking out for your best interests-- have proposed a number of changes to the country's bankruptcy laws. Buried in the fine print of these proposals is a recommendation to place a ceiling on the dollar amount of retirement assets