No. of Recommendations: 2
Unless I missed it I don’t think that you mentioned exactly how much extra they give you for investing in the company stock. For example if they give you a 33% incentive then you might get an extra $250 for $750 invested in the stock, so you would be OK if the stock declined 25% and that $1,000 in stock declined to $750. Of course investing in it is a bit of a gamble but it if the odds are right then it could be a gamble worth taking.

In addition to the risk of having too much in the company stock, there are additional risks that would need to be researched;

1) How is it vested? If you leave before five or seven years do you lose part of the company match? If it does not vest quickly you could end up in a triple whammy if the company runs into trouble in a few years. A) you lose your job in a layoff, B) the stock is low, and C) you lose the unvested stock when you are laid off.

2) How is it taxed? Company stock in a retirement plan is often the exception to the rule on retirement planning. This gets complex, do not assume anything until you have researched how this works.

3) What are the rules for selling the stock with in the retirement plan? For example if you change your mind in three years can you move sell off the company stock and move the money into mutual funds?

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