My understanding is, if the brokerage house steals your positions, SIPC insurance will return them to your account, but if they lose value that value will not be. If cash is taken from your account, that cash will be replaced, but at least some 401ks (such as my own) can’t hold cash, the money must be invested in a money market fund.
But wait! Money market funds have debt paper, such a government bonds, including European government bonds. Those could lose half their value in a day in Euroland implodes, and that’s considered a safe investment! Bonus question: how much are you being paid to assume that risk? 0.01%, which come to think of it is probably less than the fees the money market fund charges. A lot less.
Yikes. Looks like they’ve got us surrounded!