COLLECTED WISDOM™ on Company Stock in 401k Plans
Second Circuit Joins Five Other Circuits in Ruling Company Stock Investments in 401k Plans Are Presumptively Prudent - Summary: Given the Second Circuit's embrace of the presumption of prudence standard, it is incumbent on all 401k plan fiduciaries to again review their 401k plan's company stock investment language. Properly drafted company stock language may help ensure the presumption of prudence is applied in the event the price of company stock rapidly declines.
Source: Winston & Strawn LLP
, October 2011.
DOL Opines on QPAM Issue in Stable Value Context - Summary: For the second time in 2011, the DOL has issued an ERISA advisory opinion that considers the PTE 84-14 qualified professional asset manager (QPAM) exemption, this time in the stable value context. PTE 84-14 provides helpful and widely utilized relief for transactions between an "investment fund" managed by a QPAM and a party in interest to employee benefit plans invested in that fund.
Source: Sutherland Asbill & Brennan LLP , June 2011.
Offering Company Stock As an Investment Option in Retirement Plans - Summary: Given the current wave of lawsuits over plummeting stock prices and retirement plan mismanagement relating to company stock, it is more important than ever to be aware of the risks of fiduciary liability associated with offering company stock in a retirement plan.
Source: McKenna Long & Aldridge LLP , June 2011.
Company Stock Revisited: Some Good News, Room for Improvement - Summary: Among plans offering company stock, the number of participants holding a concentrated position (more than 20% of their account balance) fell from 42% in 2005 to 30% in 2009, according to How America Saves 2010, our annual report on Vanguard-recordkept DC plan data.
Source: Vanguard, October 2010.
The Price of Offering Employer Stock in Your 401k Plan - Summary: In favorable economic times, offering company stock as an investment option allows employees to share in the success of the company, engendering a sense of loyalty by linking the employee's and employer's fortunes together. But when things go awry, that same loyalty often disintegrates into allegations of fiduciary misconduct, lawsuits and financial settlements. So what can other fiduciaries learn from these situations?
Source: Employee Benefit Solutions , August 2010.
IRS Issues Final Regs on Diversification Requirements for Company Stock - Summary: The Internal Revenue Service is issuing final regulations under section 401(a)(35) of the Internal Revenue Code relating to diversification requirements for certain defined contribution plans holding publicly traded employer securities.
Source: Planadviser.com, May 2010.
401k Plans Still Gorged with Company Stock - Summary: After thousands of employees at now-defunct corporations such as Enron and WorldCom saw their retirement savings wiped out early in this decade, things were going to be different. But efforts to wean employees from in-house shares have gone begging.
Source: Financial Week, January 2008.
401k Sponsors Addressing Challenges Raised by Stock Market Volatility - Summary: Corporate scandals and the stock market's ups and downs have created new challenges for 401k plan sponsors and fiduciaries, but they appears to be rising to the challenge. This article outlines some of the actions taken by plan sponsors.
Source: Benefitslink.com, August 2006.
Directors and the Duty to Monitor under ERISA (Part II) - Summary: Recent cases provide some insight into how the courts are dealing with this ongoing issue as it relates to 401k company stock cases which are making their way through the courts. There are now a whole host of recent cases (stemming from the economic turmoil of the past few years) which have made it past the motion to dismiss phase, two of which have seemingly reached opposite results on the issue and are worthy of discussion.
Source: Benefitsblog.com, May 2004.
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