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Americans putting less company stock in their 401(k)s

December 16, 2010 |  3:19 pm

It took catastrophic meltdowns to achieve, but American workers are slowly getting the message about the risks of buying too much stock in their own companies.

Ownership of company stock in 401(k) plans fell half a percentage point to 9.2% in 2009, according to data released Thursday by the Employee Benefit Research Institute.

For years, corporate America encouraged employees to buy company stock in workplace retirement plans. Employers wanted steady buying demand that could push up share prices. Employees went along on the assumption that they understood the prospects for their companies.

But that thinking was proved wrong when companies such as Tyco International, WorldCom and others disintegrated in accounting scandals this decade and as share prices of many other companies got pummeled during bear markets.

Last year, about 46% of employees had 401(k) plans that offered company stock, according to EBRI. At those companies, 72% of employees had less than 20% of their savings in company stock, and 48% of employees held no company stock.

Of course, not everyone has gotten the message: About 5% of workers had stuffed more than 80% of their 401(k)s with company stock, EBRI said.

-- Walter Hamilton