PPA regarding Investment diversification

[Guest LSULLIVAN]

1) Does the new rule that allows a participant to diversify employer stock only apply to publicly traded stock?

2) Does this apply to an ESOP with only employer contributions?

3) Do the same rules apply to a 401k with employer stock?

4) Does anyone have a link to the final regulation as it relates to this issue?

Thank you very much for any help.

[Guest Mickey Maier]

The rule is 401(a)(35). It applies to any DC plan holding publicly traded employer securities. It does not apply to ESOPs which only have employer contributions. A 401(k) with publicly traded stock would need to comply with the rules. The proposed regulations came out in January 1.401(a)(35)-1 found at 73 Fed Register 421 1/3/2008. The proposed rules are more flexible in many respects than the previously issued IRS Notice 2006-107