Matching with company stock

[Guest DBS1]

I am tasked with finding out if using employer stock as a funding vehicle for matching contributions is a common practice. I am in a corporation now after spending many years in partnerships. They had no stock so it was never an issue. Some higher-ups here want to use company stock instead of real money (cash) to make their matching contributions. Any opinions, experience, or advice is welcome!

Thank you!

[QDROphile]

Use of employer securities is not a good idea under pure retirement plan theory unless the alternative is a contribution that is nothing or substantially less. Use of employer securities will complicate plan administration, fiduciary responsibility and expose you to more scrutiny by the Department of Labor.

[Guest fender5150]

Is it common practice? It used to be.

Check with these guys:

www.psca.org

They should be able to give you some stats regarding how many companies are still doing this. They may ask for an annual membership first. Hopefully not, unless you decide you want to join.

Before the crash, the new trend seemed to be putting employees in professionally managed investments - both EE and ER money. I hope this trend changes, but I doubt it will.

Company stock is better than no match at all, and it could incent employees to care more about the company. That was the wisdom in the old days anyway!

It definately puts a great number of eggs in one basket, which goes against the investment goal of diversification.

Thanks,

Fender

www.401ktest.com

www.ProjectedFinancialStatements.com