Q: With the recent Bear Stearns bank problems . . . , my question had to do more with 401(k) [plans]. . . . If [my employer] went out of business, is there some insurance that would back up these 401(k) [plans] that are being held? . . . .

–– W.E., Pascoag

A: If you take part in a 401(k) retirement-savings plan at work, the assets in your account are held separately from the general assets of your company, said Marvin Rotenberg, a nationally recognized authority on IRAs and other retirement-savings plans.

So if your company enters bankruptcy proceedings or otherwise collapses, the money or other assets in your 401(k) plan would be protected from claims by creditors against your company, said Rotenberg, director of individual retirement services for Bank of America.

Keep in mind, however, that the investments in your account are still subject to market fluctuation. So if your 401(k) account includes mutual funds that are invested in the stock market, for example, and the stock market goes down, the value of your 401(k) account will probably go down, too.

Also, if your 401(k) account holds stock in your own company, and your company has financial problems, the company stock inside your 401(k) will suffer.

This is why it’s a prudent to diversify the investments you hold inside your 401(k), Rotenberg said.

Q: My mother is 72 years old and has an IRA, which of course is beginning to lose money every month. She already takes an “allowance” each month. She doesn’t believe she can withdraw the full amount without penalty. I thought since she’s over 70, she can make a final withdrawal. Does it matter when she opened the account with the institution?

–– P.M., Warren

A: Once you reach a certain age, you must withdraw a minimum amount each year from your traditional IRA.

The first such required withdrawal –– technically known as a required minimum distribution –– is due by April 1 of the year following the year in which you reach age 70 ½.

But the rules establish only the minimum amount you must withdraw; you’re free to withdraw more –– even the entire account balance if you wish, Rotenberg said.

And because your mother is over 59 ½, she’ll face no early-withdrawal penalty, he said.

Bear in mind that each withdrawal is subject to federal income tax. It may also be subject to state income tax, depending on where you live. (In Rhode Island, for example, a withdrawal from a traditional IRA is generally subject to state income tax if it’s also subject to federal income tax.)

Also, depending on how your IRA dollars are invested, the trustee or custodian for your account might impose some type of fee or penalty on a withdrawal, so contact the financial institution for details.

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