[Martha]

Your employer should not have control over the 401k, instead a trustee should be in control of plan assets. The failure of your employer's business should not effect the 401k. That said, I have seen employers who failed to forward contributions to the plan. Especially contributions due right before the business goes under. If the contributions never get to into the 401k, then there would be a problem.

I used to be hesitant about rolling over a 401k to an IRA because of the less protection an IRA had under bankruptcy laws. Now if you file bankruptcy an IRA has protection up to a million in assets and rolled over 401ks into IRAs have unlimited protection. Nevertheless, if you do not file bankruptcy, under state law an IRA may have less protections than a 401k.