However, roughly 1 in 5 expect to liberalize some or all of those restrictions over the next 12 months, according to a survey by the Committee on Investment of Employee Benefit Assets, an affiliate of the Association for Financial Professionals (CIEBA of AFP).
Virtually all (92%) of the 50 large plan respondents had company stock in their defined contribution (DC) plans – and on average, that investment comprised about 29% of the total assets in those plans.
Among those plans with restrictions:
- 74% use some kind of age-based criteria
- 16% favor time-dependent diversification rules with holding periods ranging from one to 10 years
- 20% cited ‘other,’ i.e., a combination of age and service requirements, and partial diversification after a period of time.
Forty percent said their plans had an employee stock ownership plan (ESOP) feature. Plans with an ESOP tended to be larger than the other plans – the average value being $7 billion, rather than $3.7 billion, according to CIEBA. More than three-quarters of the respondents with an ESOP feature (such as a KSOP) require 100% of the match to be in company stock.
Still, DC plans hold a relatively small percentage of outstanding shares of company stock. In almost three-quarters (72.5%), the DC plan holdings were 5% or less of the total outstanding shares.
Fifty of CIEBA of AFP’s 120 plan sponsor members
responded to this October 2001 survey. The average market
value for 401(k) plans in the survey was $5 billion.