Many employees rely heavily on the money they put into their employer-sponsored 401(k) account to pay for their retirement. The last thing they want is for the money to be stolen by cyber thieves. Cyber security is a growing concern.
When Equifax, a credit reporting agency, was hacked in September 2017, hackers stole information that may be used to steal money from Equifax’s clients.
The information included Social Security numbers, birth dates, addresses and driver license and credit card numbers. The good news is that investment accounts such as a 401(k) are relatively safe.
There are enough safeguards and daily asset management measures in place that a major investment firm likely will not see its accounts drained. The biggest threat to retirement accounts comes from how individual employees handle those accounts.
There is insurance you can purchase that will reimburse individuals up to $500,000 if the brokerage firm fails, but it does not protect your employees against theft or fraud. An individual could be reimbursed if money from their account is stolen, but it depends on whether they did their due diligence to protect the account and if they notify the brokerage firm quickly.
In short, it pays to be careful. There are several steps each party to a retirement account needs to take to keep the money safe.