Is 401K Tied to Stock?
Many plans contain a provision mandating that employer contributions be made or invested in company stock, which can prevent participants from being able to immediately diversify. This can be significant if participants are being forced to invest in poorly performing stock.
What does ERISA say about company stock in 401K Plan?
ERISA expressly states the duty of asset diversification within the plan’s investment options and the duty of prudence to the extent it would otherwise require diversification from company stock. Following the terms of the plan’s documents.
What kind of taxes do you pay on company stock in 401K?
Company stock in your 401 (k) has special rules, specifically an available tax treatment called Net Unrealized Appreciation. Under the right circumstances, you pay only the capital gains tax rate on appreciation, rather than regular income rates.
