While many types of retirement funds are insured, legislation changes quite frequently regarding the amounts that are insured. The two main U.S. government agencies responsible for insuring retirement funds are the Pension Benefit Guaranty Corporation and the Federal Deposit Insurance Corporation. Other retirement investments such as life insurance products often carry the nongovernmental guarantee of individual companies.
Pensions
Pension plans, including 401k plans, profit-sharing plans and money purchase plans, are guaranteed by the Pension Benefit Guaranty Corporation. Specifically, the PBGC guarantees a minimum basic benefit in place at the time your employer went bankrupt or otherwise shuttered their pension plan. This guaranteed benefit includes the amount you should have received at normal retirement age, early retirement benefits, annuity benefits for your survivors and certain disability benefits.
IRAs and Retirement Plans
If you have an Individual Retirement Account of any kind, including SEP, SIMPLE, or Roth IRAs, the Federal Deposit Insurance Corporation insures the full value of your account up to $250,000. While individual investments such as mutual funds or stocks would not be insured if they were in regular taxable investment accounts, by virtue of residing within a designated retirement account, they garner FDIC insurance as well.
Checking, Savings and Money Market Accounts
Retirement funds do not necessarily have to be placed in expressly designated retirement funds. In addition to insuring retirement funds such as IRAs, the FDIC also insures traditional checking, savings and money market accounts up to $250,000 per individual.
Annuities
Annuities and other insurance products are not guaranteed by the FDIC, the PBGC or by any other U.S. government agency. However, they are guaranteed by the insurance company that issued the investment. Generally speaking, this guarantee may be strong and reliable, but it will never equal the "full faith and credit" of U.S. government backing that the FDIC and PBGC carry. In order to help you determine the reliability of an insurance company's promise, outside ratings agencies such as A.M. Best rank the financial strength of companies from "A++" or "superior" down to "F" or "in liquidation." If you are concerned about the safety of your retirement funds with an insurance investment, you should only invest in companies rated in the very upper tiers of the ratings scale.
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