Bad financial news piled upon more bad financial news might have you worried about your 401(k) funds.

If you've ever read The Grapes of Wrath, it's likely that the recent economic news has you spooked. With all the talk of corporate failures and federal bailout plans, you might be wondering if you're close to losing everything-including your 401(k) savings.

Lehman: No dibs on your retirement

As a 401(k) investor, you probably have two concerns: Can a bankrupt financial services provider simply take the assets in my account? And, what will happen to the value of my investments as the country works through this financial crisis?

The assets within your 401(k) belong entirely to you. Even if your account is held with the now-bankrupt Lehman Brothers, your cash, mutual funds, and other investments can't legally be taken from you. While the bankruptcy court will make a plan to pay off Lehman's creditors, that plan will not include your 401(k) assets. The SEC is watching over the process to ensure that your money doesn't get mixed up with Lehman's.

Unfortunately, if you used your 401(k) funds to buy Lehman stock, that's a different story. As a stockholder, you won't get your investment refunded until after secured and unsecured creditors have been paid. If there isn't enough money to repay creditors, you may end up with nothing.

Investments and insurance policies

There's a clearer answer pertaining to the value of your money fund investments. Here's the background: Up until recently, money markets were considered to be as safe as cash. But news of value losses in the country's oldest money fund, The Reserve's Primary Fund, shook investor confidence to its core. To restore that confidence, the Treasury Department established a temporary program to insure amounts held in money market funds. The fund has to opt-in to the program, so check with your fund provider to see if you're covered. If you are, the Treasury guarantees coverage for invested amounts as of September 19, 2008.

As for the value of your other equity investments, there's no predicting how long the stock market will continue to slide. Or whether more companies will go under. Just remember, you're in this for the long-haul. Eventually, things will turn around.

You might also have concerns about your AIG-issued insurance policies. If AIG sells your policy to another insurance provider, you shouldn't be disrupted too much; you'll just have a different company insuring you. It's more complicated, however, if AIG owes you money and then goes bankrupt. In that case, you might end up being a high priority creditor. That puts you at the front of the line when the conservator starts dismantling the assets.

All of this means that you can disregard those visions of traveling across the country in a rickety old truck, looking for work. The economy is in crisis, but you aren't going to be wiped clean by Lehman, The Reserve, or AIG.

Published on December 26, 2013