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401(k)s with company stock fading fast

The practice of throwing company shares into retirement plans has been waning for some time, but a recent Supreme Court decision could hasten its demise.

By Marlene Y. Satter | Updated on July 18, 2014
A worker prepares to secure cleaned and repaired oil retention booms at a staging area in Grand Isle, La., after the 2010 BP offshore oil spill. Photo: AP.

The practice of throwing company shares into retirement plans has been waning for some time, but a recent Supreme Court decision could hasten its demise.

In Fifth Third Bancorp vs. Dudenhoeffer, the court last month unanimously rejected the notion that fiduciaries of employee stock ownership plans are protected by a presumption of prudence known as the Moench Presumption. Instead, the justices decided that ESOP fiduciaries are bound by the same level of duty that governs other ERISA fiduciaries — with the exception that they are not required to diversify the assets of a fund.

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