DABU

My wife works for a company publicly traded on NADAQ and has an ESOP option in her 401(k). Company's stock in ESOP is 100% vested. The plan administrator sells a small quantity of vested stock every quarter to pay towards the administrative fee. She called the plan administrator and the administrator indicated that the expenses cannot be taken out of a stable value/money market fund. So, the administrator must sell the stock. Is this a common practice? We don’t want to sell the vested company stock to pay for paying administrative expenses. Any comments/suggestions will be appreciated. She also has mutual funds and expenses have been taken out from the corresponding investments. We don’t have any issue with mutual fund expenses. Thanks for your help. Dabu.

All, Thanks to all of your replies. My wife contacted her 401(k) administrator and they indicated that "options" are not allowed in the self-directed brokerage account. I am going to review 401(k) plan document and look in detail. The idea of "Equity Collar" came after reading Barron's Magazine article published on March 25, 2019. With regards, Dabu.

Good morning, My wife has large percentage of her portfolio in her company/employer stock and we are trying to re-balance the portfolio. We are planning to sell a portion of company stock and transfer the cash to existing self-directed brokerage account within 401(k) and account is with Fidelity. The company’s share price is increasing, excellent management, and is a growth stock. My question is, does 401(k) plans allow “Equity collars?” An equity collar consists of the simultaneous purchase of a "put option" and the writing of a "call option." Most of the 401(k) administrators don’t know the nuts and bolts of finances. What is the best way to ask the administrator about “Equity Collars?” Could we transfer the shares to 401(k) self-directed brokerage account and use equity collar? My wife doesn’t want to send a wrong signal to her employer by selling a large portion of company stock. Any suggestions and comments will be appreciated. Thanks, Dabu.