I have a KSOP through my employer that I've invested 100% in company stock. I am now concerned that I'm not diversified and would like to move out of company stock and into mutual funds. Is this allowed with the funds I've contributed to the account?

By Denise Appleby AAA
A:

In order to be sure of your options, it's best to check the summary plan description (SPD) for the plan. The options may vary for different plans. This should include an explanation of the rules, including diversification options. If you have online access to your KSOP account, you may also have online access to your plan's SPD. If not, your plan administrator should be able to provide you with a copy.

The Pension Protection Act of 2006 (PPA) does require publicly traded companies to permit employees to liquidate employer stocks and reinvest in other assets at any time, providing:

  1. The stocks were purchased with the employee's salary deferral contributions, or
  2. The stocks were purchased with employer contributions, and were purchased after the employee completed three years of service with the employer.

For more on diversification, read The Importance Of Diversification.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. What does a mutual fund's beta coefficient measure?

    Evaluate the risk associated with a particular mutual fund by determining its beta coefficient, which illustrates the fund's ...
  2. What's the safest way to invest in high-yielding dividend stocks?

    Learn about some of the most important safety factors that you need to consider before you invest in high-yielding dividend ...
  3. How can I get a mutual fund prospectus?

    Read and understand the prospectus before investing in a mutual fund. You can obtain a copy from the fund company, your financial ...
  4. Can I purchase mutual funds for my IRA?

    Learn how to invest your IRA assets in mutual funds. Discover a few of the different types of mutual funds available for ...
RELATED TERMS
  1. Concurrent Periods

    A period of time in which more than one injury or disability ...
  2. Protected Cell Company (PCC)

    A corporate structure in which a single legal entity is comprised ...
  3. Registered Holder

    Shareholders who hold their shares directly with a company.
  4. Discretionary Investment Management

    A form of investment management in which buy and sell decisions ...
  5. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...
  6. Duty Of Care

    One of two primary fiduciary duties of directors, the duty of ...
Related Articles
  1. Africa's economic growth and growing stability has gotten the attention of adventurous investors. What kind of ETF or mutual fund options are available?
    Mutual Funds & ETFs

    Destination Africa: These Funds Offer ...

  2. A Monte Carlo simulation allows analysts and advisors to convert investment chances into choices. The advantage of Monte Carlo is its ability to factor in a range of values for various inputs.
    Fundamental Analysis

    What Can The Monte Carlo Simulation ...

  3. First time stock investors may ask, is there any way to buy insurance on stocks to prevent losses?
    Options & Futures

    Stock Safety: Top 3 Ways to Limit Your ...

  4. Options & Futures

    Applying Binary Options To Equity Markets

  5. Investors can use derivative securities to effectively buy insurance on their individual holdings or on their portfolio as a whole.
    Options & Futures

    Can You Buy Stock Insurace? 3 Strategies ...

Trading Center