MI Energy Company Stops Offering Company Stock in 401(k) Plan

March 1, 2007 (PLANSPONSOR.com) - Fearful of being hit with participant lawsuits relating to the use of company stock in its retirement plans, a Jackson, Michigan energy company is dropping such shares as a 401(k) option and from its savings plan matching contribution.

Starting May 1, the company said its CMS Energy Common Stock Fund will no longer be open for new 401(k) investments and the employer’s match will no longer be in CMS Energy Common Stock, the Detroit Free Press reported.

Participants will be able to reallocate investments in CMS Energy Stock Fund to other plan investment alternatives. Beginning November 1, 2007, any remaining shares in the CMS Energy Stock Fund will be sold and the sale proceeds will be reallocated to other investment options, the news report said.

The money will be reallocated by the employees and the amount they have in their CMS stock fund will be allocated to other options. The company also said it will pay the brokerage fees and commissions related to the transfers.

“This change was made primarily to reduce the company’s exposure to lawsuits in connection to the employee savings plan,” Jeff Holyfield, a spokesman for CMS, told the newspaper. “There are several other companies that are taking this step.”

According to the news report, any shares employees own outside the 401(k) plan will not be affected by the change.

Officials at CMS said there were about 9,800 employees and retirees who participate in the 401(k) plan, which began in 1963. As of Feb. 20, there were 10.7 million shares of CMS common stock in the company’s stock fund.