The Quandary of Publicly-Traded Employer Stock in a 401(k) Plan

By and on June 20, 2017

Offering employer stock in a 401(k) plan investment lineup can seem like a win-win situation. It can enable employees to become company owners—real, skin-in-the-game, participants in their employer’s economic future—through a simple deferral election. The U.S. Supreme Court has even recognized the value of employer stock funds, confirming that Congress sought to encourage their creation through provisions and standards contained in the Employee Retirement Income Security Act of 1974 (“ERISA”).

However, in the wake of a series of high-profile employee lawsuits seeking recovery against Enron, Lehman Brothers, and other employers for losses from 401(k) investments in employer stock, such funds can—almost as easily—seem a recipe for disaster. This article examines the quandary that employer stock funds pose for plan sponsors, who must navigate ERISA’s careful balance of (1) ensuring fair and prompt enforcement of employee rights under employer-provided retirement plans while (2) encouraging employer creation of these plans.

Read the full article.

Originally published in Bloomberg Law, May 25, 2017

Erin TurleyErin Turley
  Erin Turley focuses her practice on employee benefits matters. She has extensive experience handling issues pertaining to the Employee Retirement Income Security Act of 1974 (ERISA) and employee stock ownership plans (ESOPs). Read Erin Turley's full bio.


Emily RickardEmily Rickard
  Emily Rickard focuses her practice on executive compensation and employee benefits, and has devoted a substantial portion of her practice to assisting employers in implementing and maintaining employee stock ownership plans (ESOPs). She has represented companies, inside ESOP trustees, and outside ESOP trustees in buy-side and sell-side transactions, as well as in ongoing ESOP compliance matters. Read Emily Rickard's full bio.

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