You would think that after the horror stories about Enron employees who lost their job and their retirement savings more employees would diversify out of their own company’s stock. Not so, according to a recent survey by Hewitt Associates, a benefits consulting firm. It found that at the end of 2002 some 28% of all 401k plan money was invested in employer stock. While down sharply from a high of 42% at the end of 2001, it still represented a large chunk of the retirement savings of many employees. Even more troubling, lower-paid employees with smaller accounts tended to have the highest concentration of company stock in their accounts.
Part of the problem is with employers who get a tax break for using their own stock in 401k plans. Some still force employees to take only company stock as matching contributions to what employees put away, and some also require employees to hold onto such stock until a certain age.
