Such investment schemes should have been banned following Enron and other spectacular company stock-retirement plan meltdowns.
Further, in practice independent fiduciaries are generally brought in to oversee company stock in a retirement plan at precisely the moment the stock should be dumped.
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For Barbie Snodgrass, who has a modest amount of stock in a retirement plan, the meltdown has turned this election into a make-or-break one, tipping her away from McCain without convincing her that she can trust Obama.
Neglecting to fund a retirement plan or forgoing an employee stock purchase plan could have catastrophic results in losses of hundreds of thousands of dollars and delaying retirement for many years.
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Is the stock benefiting your plan toward an early retirement?
While in theory common stocks provide inflation protection, a replay of the 17-year period between 1965 and 1982 (during which the Dow lost more than 68% of its CPI-adjusted real value) would bankrupt a retirement plan that depended upon the stock market.
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Another, which on its face is quite plausible, is that Romney stuffed far more into his retirement plans each year than the maximum allowed by law by claiming that the stock of the Bain company deals that the retirement plan acquired had only a nominal value.
Shortly before Enron's demise its employees had 62% of their retirement plan assets tied up in its stock.
Ms Patterson, along with other Enron employees, was prevented from selling her shares of Enron stock, which she bought through the firm's retirement plan, or 401(k).
Assuming the company stock in the plan has lost half its value this year, employee retirement assets have likely taken a near 9% hit.
January is often a big month for stock-fund inflows, in part due to lump-sum retirement-plan contributions, says David Blanchett, head of retirement research at Morningstar Investment Management, an advisory unit of Morningstar Inc.
Many workers who are participating in the plans are left holding overvalued shares, long after the original owner has cashed out: "I'm not against employees owning some stock in their employer, but not if it's tied to a retirement plan, " he says.
Investing 17% or 18% of retirement plan (whether define contribution or define benefit) assets in company stock is reckless and irresponsible, in my opinion.
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