Employer Securities

[PFranckowiak]

I am trying to figure out the limig of Employer Securities is a 401(k) Plan.

Participant Directed Accounts

Participant may elect Employer Stock in Self Directed Account

Can transfer anytime.

Many other investment options are available.

non-public company

I see that the 10% limit of plan assets does apply

But I see something that limits the amount of stock held by the plan to 25% of the stock issued.

ER wants to add, I want to make sure we cover all the potential problems.

Employees are well educated, so ER does not worry about communicating to the employees the risk of putting retirement money and their job all in one.

Ideas?

Thanks

P

[Belgarath]

If it is completely participant-directed, ("eligible individual account plan") then I don't think the 25% limitation applies, nor does the 10% limit apply. I'm assuming it is not part of a floor-offset arrangement. And of course assuming the plan document provides for it...

You may want to take a look at ERISA 407, which should help to clear up some of your questions.

[PFranckowiak]

I tried reading it - but it was confusing. No part of floor offset. Just want to make sure we don't have to watch any limits if participants get carried away and invest a lot in the Employer Stock.

Thanks

[A Shot in the Dark]

If the employer is a non publicly traded company, there are a variety of issues that need to be reviewed, Some of them are:

Valuation/Appraisal of the non publicly traded stock

Terms, agreements, timing of acquiring stock

Terms, agreements, timing of selling the stock

Share Accounting

Etc.

Etc.

Etc.

If it is a non publicly traded company, it will be nearly impossible for the participant to be able to transfer (buy/sell) at any time.