Example? Think Enron. By the end of 2000, 62% of its employees’ 401(k) money was in Enron stock. One worker who’d decided to move his whole account from Enron’s long list of investment choices into company stock saw his account balance dwindle to $40,000 from its previous $470,000.

 

What You Need to Know Now:
Newcomb offers these suggestions to those who worry that their company might be on the ropes:

  • If you’re not invested in company stock, take a deep breath and relax: Your 401(k) retirement savings should be entirely secure if they're held by a third-party custodial firm approved by the IRS.
  • On the other hand, if you’ve invested your own retirement savings money in your company’s stock, or have received matching funds in company stock, locate your plan document and find out when and how you can switch these funds for a different investment class. Your employer is required to provide you a summary plan document annually.  Some companies post their plan documents on their web site. If you can’t find yours, ask the human resources department for a copy.
  • Remember, while there may be limits to what you can do with unvested company matching contributions made in employer stock, you should always be able to sell company stock that you’ve purchased with your own money.

Finally:

  • To make sure there is no foul play, look carefully at your paycheck stub and 401(k) statement. Make sure what’s being deducted from your paycheck is being credited to your 401(k). And if there’s something amiss, it isn’t necessarily your employer’s fault. “If the payroll company your employer is using hasn’t been properly depositing your 401(k) contributions," Newcomb says, "you want to take steps to get that money back.” If there are errors, in addition to contacting your employer's HR department, you may also want to consult the U.S. Department of Labor.

 

 

 

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