With the PG&E bankruptcy, inquiring minds want to know if there was company stock held in the 401k plan?
Well yes, there was.
At least as of Dec. 31, 2017, the 401k plan contained $720,647,988 of PG&E stock.
That was approximately 11 percent of the total asset base in the plan at that time.
Given the price change (it was $44.87 on 12/21/17 and closed at $13.87 on Tuesday) and assuming participants have company stock in their plans, it would suggest that the value of the stock held by participants has declined by about $500,000,000 in a little over a year.
Yes, I’m making a number of assumptions, but once again the question of employer stock in a 401k plan with intentions of obtaining fiduciary relief through section 404(c) is front and center.
And once again, I can’t understand why any informed, well-advised investment committee would risk having this ‘accident’ happen on their watch (a key word being “well-advised).
In March of 2018, Bloomberg Law reported that “Target, Microsoft Lead Move Away From 401k Stock Investments.”
It went on to state:
Verizon, Target, Comcast, and Microsoft are among the growing number of public companies rethinking the wisdom behind offering their own stock as an investment option in their workers’ 401(k) plans.
In the last five years, some of the country’s largest employers have taken steps to reduce or eliminate the company stock held in their retirement plans, according to securities filings reviewed by Bloomberg Law.
Tactics range from total liquidation of a plan’s company stock holdings—as Comcast, Xerox, and Discover Financial have done—to narrower measures aimed at reducing the amount of stock held by the plan.”
I guess the investment committee at PG&E had different consultants—with very different advice on 404(c).
Dan McConlogue, AIF, PPC, is director of corporate retirement plans with Ritholtz Wealth Management.
Dan McConlogue is the Director of Corporate Retirement Plans at Ritholtz Wealth Management. Dan is the principal and founder of Eleven O’Clock Associates, a retirement plan consulting firm based in Florida. Dan joined RWM at the start of 2016, bringing over $70 million in assets, plus thousands of 401(k) participant clients whose assets are under advisement.