COLLECTED WISDOM™ on Company Stock in 401k Plans

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. Located at: Financial Week, January 2008. Click on headline for full article.

Most Employers Ease Company Stock Requirements - Summary: Going well beyond what federal law requires, many U.S. employers now allow 401k plan participants to sell matching contributions made in company stock immediately, according to a recent survey. Located at: Workforce.com (free registration may be required), November 2007. Click on headline for full article.

Maintaining Confidentiality: Publicly-Traded Company Stock in 401k Plans - Summary: For plans that offer publicly-traded company stock as an investment option, the regulations under 404(c) impose an additional requirement. That requirement is a confidentiality procedure for the information related to the purchase, sale and holding of company stock and the exercise of voting rights. Located at: Reish Luftman Reicher & Cohen, June 2007. Click on headline for full article.

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. Located at: Benefitslink.com, August 2006. Click on headline for full article.

Reexamining Moench -- When Must a Fiduciary Sell Employer Stock? - Summary: A fiduciary confronting company stock issues often is placed in the uncomfortable position of deciding between compliance with express provisions of the plan that mandate investment in the plan sponsor's stock or selling the stock in order to avoid claims of breach of fiduciary duty. Making the situation even more difficult, the fiduciary must realize that if it ignores the plan provisions and sells the plan sponsor's stock, it could be held liable by plan participants if the stock recovers. Located at: Snell & Wilmer LLP , June 2006. Click on headline for full article.

How to Manage the Pitfalls of Company Stock in 401k Plans - Summary: Companies that allow employees to invest their 401k accounts in company stock face a serious risk if the stock declines precipitously. Faced with large losses, employees can take legal action to recover their retirement savings. There are steps CPAs can recommend companies take to avoid such lawsuits. Located at: Journal of Accountancy, March 2006. Click on headline for full article.

Amount of 401k Investments in Company Stock - Summary: Charts from Watson Wyatt show the percentage of 401k assets that are invested in company stock and whether employers require their employees to put matching funds in company stock. Located at: Workforce.com (free registration required), April 2005. Click on headline for full article.

Retirement Perspective: The Role of Company Stock in a Defined Contribution Plan - Summary: This Perspective focuses on the role company stock may play in retirement plans sponsored by publicly traded companies. The rules for tax–qualified plans that hold company stock in closely held companies (particularly Subchapter S corporations) are quite different and can be very attractive to the employer. But many of the conflicts discussed in this article will also apply, sometimes even more acutely, to the company stock plans of closely held companies. Located at: Mercer Human Resource Consulting LLC, September 2004. Click on headline for full article.

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. Located at: Benefitsblog.com, May 2004. Click on headline for full article.

Managing the Risk of Company Stock - Summary: In recent years, company stock has become the primary source of 401k fiduciary litigation. Directors, officers and committee members who act as ERISA fiduciaries are personally liable for losses resulting from their imprudent conduct. That raises the obvious question: What can be done to protect fiduciaries where the 401k plan offers company stock as a match or as an investment option, or both? Located at: Reish Luftman & Reicher, June 2003. Click on headline for full article.

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