Caps on Employer Stock in Plans Appear Dead

One legislative outcome is now very clear: there will not be caps on the amount of employer stock in 401(k) plans or KSOPs, nor will employer matches of company stock receive a lower tax deduction. Proposals along these lines are receiving little support. The Report of the Department of the Treasury on Employer Stock in 401(k) Plans outlines the Administration's view on this, arguing that such caps would discourage employer matches, would be too arbitrary in light of varying employee financial needs, and would be difficult to administer. The Department estimated that one in five participants in 401(k) plans would have to sell stock if a 20% cap on company stock were imposed.