New Data on Company Stock in 401(k) Plans

Company stock in 401(k) plans fell to 8% of total 401(k) plan assets in 2011, according to a new report, "401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2012," from the Employee Benefit Research Institute. The yearly analysis is the definitive look at 401(k) plans and is based on data from 1.2 million plan participants in a representative range of over 64,000 companies. Company stock in 401(k) plans has steadily declined since its peak of 19% in 1999.

Many companies do not offer company stock as a 401(k) plan option. Just 2.3% of the companies in the study offered company stock, but because the companies that do tend to be among the largest employers, 38.2% of the participants are in a plan where company stock is an option. Among these, 19.7% of their 401(k) balances are in company stock. The percentage in company stock increases gradually with age cohorts from 12% for those in their 20s to 21% for those in their 60s. While this could be because older employees have more confidence in their employer, a more likely explanation is that this age cohort started investing in company stock when company stock was more popular, suggesting that further declines in company stock in these plans is likely. Among those with company stock in as an option in their plans, 74% of participants held less than 20% of their assets in company stock, and 51% held none.