Putting Too Much in Company Stock.
A classic mistake that can come back to haunt you.
Have you invested too much of your 401(k) in company stock? This can happen – and you may not be fully aware of it.
Back when corporations offered traditional pension plans, the federal government watched out for this tendency. In 1974, the Employee Retirement Income Security Act (ERISA) made it illegal for pension plans to invest more than 10% of their assets in company shares. These days, the employee-directed 401(k) is the default workplace retirement plan – but ERISA doesn’t limit the amount of 401(k) assets that can be directed into company stock. 1
Have you invested too much of your 401(k) in company stock? This can happen – and you may not be fully aware of it.
Back when corporations offered traditional pension plans, the federal government watched out for this tendency. In 1974, the Employee Retirement Income Security Act (ERISA) made it illegal for pension plans to invest more than 10% of their assets in company shares. These days, the employee-directed 401(k) is the default workplace retirement plan – but ERISA doesn’t limit the amount of 401(k) assets that can be directed into company stock. 1
