A recent article in USA Today recommends that participants who are too heavily invested in company stock need to be more vigilant about diversifying their retirement account portfolio. The financial collapse of companies such as Bear Stearns, Enron and others has highlighted the downside of putting all your investment eggs in one basket, according to financial writer Sandra Block, the author of the article.

Block points out that even now, some employees still own a percentage of company stock that could put their retirement savings at risk should the company suffer a reversal of fortunes. While a rule of thumb is that employees should not have more than 10 percent invested in any single company stock, Block’s research found that:

• Over a third of employees with 401(k) plans have more than 20 percent of their savings invested in company stocks
• At least 25 percent of participants over the age of 60 had at least half of their investments in company stock

In addition to investments made by participants, Block’s article found that some companies make their employer match in the form of company stock.

As a solution, Block recommends that participants review their account's asset mix on a regular basis and diversify accordingly. Those with an excess of company stock should take the opportunity, several times a year, to sell off such stocks and reinvest the proceeds into other investment options.

NADART plans offer various and diversified investment options, including brand-name mutual funds and Target Dated Funds. To learn more, you can contact one of our representatives at (800) 462-3278, ext. 7161 or by e-mail at nadart401k@nada.org.