My wife and I are living on our Social Security benefits. I've been very pleased with the growth of my Fidelity 401k in my former employer's retirement plan. As far as I know, I can leave my balance in the company's plan indefinitely, correct? Obviously my balance fluctuates somewhat with the performance of the stock market, but Fidelity has done a great job so far.

I'm 71, so next year (2021) Fidelity will have to pay me a Required Minimum Distribution, which will be a taxable ballpark-figured amount of about $25K, which we probably will not need to spend. I'll set it aside and use part of it to pay our income taxes as well as our Medicare supplemental insurance plan ("Part F"), property taxes and homeowners and earthquake insurance if needed. (Through frugality and diligence, we paid off our mortgage years ago.)

Soooo, what if the market crashes? Should I move my balance to several FDIC-insured IRAs now? I realize the return on FDIC-insured IRAs would be miniscule compared to Fidelity's historic returns, but at least the funds would be insured. I want my wife to be able to comfortably get by should I die.

Any advice or recommendations? I'm inclined to stay with the Fidelity 401k, but I don't want to be foolish about these retirement funds.

Thank you in advance for your comments and answers!

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    A 401k or IRA is an account type, not an investment. You can hold investments inside your 401k or IRA. Fidelity and any other broker will have a "same as cash" money market fund if you're worried about losses. What are your current investments inside the 401k?
    – Nosjack
    Sep 29, 2020 at 21:01
  • My 401(k) is also with Fidelity. While they do offer quite a few standard choices, our 401(k) accounts are simple. Either S&P index or their "stable value" fund. That's what I use for the 'safe' allocation. Sep 29, 2020 at 21:02
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    If not already doing so, consider the Medicare high deductible Plan F. It's only available to those who were eligible for Medicare before January 1, 2020. It offers the same benefits as the standard F plan, the difference being that you pay far less per month and you pay the 20% copay until your reach the out of pocket deductible limit. The healthier you are, the more you save. And if it hits the fan and you reach your deductible, it will still cost you less than the standard F coverage. I've been averaging about $2,600 in savings per year over the past few years. Sep 29, 2020 at 21:26
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    FDIC or the Federal Deposit Insurance Corp. insures depositors's money in deposit accounts (i.e checking, savings) against bank failures (up to $250k per account). It does NOT insure investment assets, whether in 401ks or IRAs. This is why you always see the brokerages like Fidelity/Schwab have a disclaimer: "Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value" you may however, have FDIC-insured accounts inside a 401k/IRA if you have a money market account under your IRA, for example. However, most IRAs don't have deposit assets. Sep 30, 2020 at 5:26

1 Answer 1


The FDIC will not protect you in the event of a market crash. It will only protect cash deposits and other cash-equivalent securities held within your retirement accounts if the institution holding those deposits (not necessarily the brokerage account) fails. If you invest in stocks, mutual funds, bonds, etc. that go down in value due to a market crash, FDIC will not help you. You're on the hook for those losses. It doesn't matter whether those are in a 401(k) or an IRA - the protection (or lack thereof) is the same. There are other reasons for moving from a 401(k) to an IRA that is covered in other questions here.

There is also SIPC insurance that protects you if your brokerage fails, but it does not protect against the value of your assets going down either.

If you are worried about a market crash, then you could move more (not all in my opinion) of your investments to low risk instruments like money markets or investment-grade/government bonds. Nothing short of cash is guaranteed not to lose value, but you can minimize loss by investing in low-risk assets. Be warned, however, that low risk assets also limit potential gains, so you may miss out on an opportunity if the market does NOT crash.

That's why I say move some of your investments. You won't need all of your savings the instant you retire, so you can keep some money that you won't need for several years in higher-risk investments to capture the gains when the market recovers (or keeps gaining if there is NOT a crash).

The above is not specific investment advice - just a general idea for how to reduce risk of loss in a portfolio. If you want advice tailored to your specific needs, then make an appointment with a local financial/retirement planner (ideally one that doesn't primarily sell insurance...)

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    The fact that he's mentioning FDIC-insured makes me think he's talking about an IRA Certificate of Deposit. IRA investment accounts are not eligible for FDIC insurance (as you note, the applicable insurance for securities is SIPC and only protects against loss of ownership not fluctuation in value). AFAIK your second sentence is wrong. FDIC doesn't protect cash held within investment accounts at all, only SPIC does. That's why sweep programs that move cash out of the investment account to an actual deposit account exist.
    – Ben Voigt
    Sep 29, 2020 at 23:16
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    Nothing short of cash is guaranteed not to lose value Isn't that what the question is asking about moving to? What else is FDIC-insured?
    – Barmar
    Sep 30, 2020 at 14:39
  • @Barmar The question is asking about moving to "FDIC-insured IRAs". Perhaps just storing it as cash is implied, but that's not what the question says.
    – D Stanley
    Sep 30, 2020 at 14:55
  • The only thing that can be FDIC-insured is bank deposits, so what else could it mean?
    – Barmar
    Sep 30, 2020 at 14:57
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    @Barmar: But cash is guaranteed to lose value in the long run.
    – Joshua
    Sep 30, 2020 at 15:33

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