As Gannett's stock plunges, review your 401(k)

You're not still investing much retirement money in Gannett stock, are you? I ask because I was surprised when an employee told me she didn't know the company's 401(k) plan allowed her to sell her GCI shares, an option allowed for nearly six years now. Instead, she'd let her Gannett stock holdings -- received as the company's matching contribution -- pile up even as their value plunged.

Six years after Enron's collapse cost its employees their retirement savings, company stock remains the single biggest employee holding in 401(k) plans overall, USA Today said yesterday. "On average, employees have 21.9% of their 401(k) money invested in their employer's stock," the story says, citing 2006 data. Another 20% of participants have at least half their retirement money in company shares.

For as long as I can recall, financial professionals have urged workers to limit 401(k) investments in company stock for a simple reason: You don't want your entire future tied up in one business. Even companies that seem rock-solid can take a fall -- as we've seen with Gannett since early 2002, when the board of directors finally allowed employees to sell GCI shares.

"While the board considers Gannett stock to be an excellent investment," then-chairman Doug McCorkindale (left) said at the time, "the directors want to provide our employees with the flexibility to plan their own financial future."

Indeed! Gannett's stock rose after the board's tardy decision, but eventually fell nearly 52%, based on yesterday's closing price. That vividly illustrates the risk to employee security of overinvesting in an employer' s stock. The chart, above, shows GCI's roller-coaster path since late 2001; the blue arrow marks the date of the board's decision. (Full disclosure: I sold all my Gannett stock -- about $25,000 worth -- in early 2004, when it was trading around $90 a share. I figured it was poised for a fall; I just didn't realize how bad it would be.)

Bottom line: Get acquainted with what's in your 401(k) account by heading to Gannett's Your Benefits Resources website, where employees manage their benefits.

[Data: Google Finance]