Wells Fargo 401k transferring to Principal, lose ERISA protection?

I’ve got about half my retirement funds in a Wells Fargo 401k from former employers. Several months ago, I got a letter saying that Wells Fargo’s retirement division would be merging with Principal. I didn’t think much of it, as my account balance and investments would still be secure. I signed in today to look over things and it’s still a work in process to integrate everything into a new platform. I decided to google “Wells Fargo Principal” just to see what’s happening. I found this source that honestly makes me cringe. It sounds like we as investors will lose all rights to our funds and will no longer have ERISA protections. Should I take out the balance of my account and put it into an IRA?

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A 401k has ERISA protections while an IRA does not, so moving it out won’t help on that front. It’s up to you if you want to invest in some life insurance annuity, which might not have similar protections under Principal, but hopefully you’ll have other non-annuity choices. Principal is known for kinda mediocre retirement plans IIRC.

So you can move your assets to an IRA, and that’s not a bad thing if you want to. 401k plans generally have better creditor protection than IRAs (state dependent), but if that’s not an important factor and you want more freedom to chose your own investments, moving it out now might be a good time.


ERISA is best in class for sure for both bankruptcy and non-bankruptcy events. If you’re losing ERISA protection by being transferred to Principal - something to definitely confirm with them, then you have nothing to lose by rolling your 401k over to an IRA.

IRAs are fully protected from bankruptcy events but not all states protect your IRAs from non-bankruptcy events (most do but if you’re in Wyoming, you’re SoL). A few States even treat Roth IRAs and traditional IRAs differently in terms of protection.
But if you’re in a State that offers good protection in non-bankruptcy event situations, I don’t feel that you’re giving up too much by rolling over from 401k to IRA.


Do you have a 401k at your current employer?

I believe you can roll an old 401k into your current employers 401k too. So thats a possible option if your currently employed with a company with a decent 401k
Otherwise rolling into a IRA is probably a good idea.