Employees at Color Tile, which made floor coverings in Fort Worth, Texas, couldn't pick their own investments. The money was controlled by the company, and invested largely in company-owned real estate. In 1996, the firm went bankrupt, significantly devaluing the retirement funds. The workers had no idea that their money was at such risk. This particular horror story is less likely to be repeated, thanks to a law passed by Congress last year.
Most smaller plans are also safe.
Still, this is where you face your biggest risk. These plans may not have top-drawer investment managers. Then she learned that the trustee lost the plan's money back in 1992 and never told anyone. The reports Bavin and other employees had been getting every year were apparently false. He used it for other purposes, then went broke.