The U.S. Department of Labor is about to unveil a final rule aimed at public employers that fails to encourage employees to diversify away from company stock.
The final rule will appear Friday in the Federal Register, Labor Department officials say.
The rule implements a provision of the Pension Protection Act of 2006 that guarantees many 401(k) plan participants who own stock in their employers the right to sell the stock.
Under the PPA, public employers must allow for diversification and notify employees of the importance of limiting their exposure to the performance of any one investment.
The new final rule will give the Labor Department the ability to impose fines of up to $100 per day on plan administrators who fail to comply with the investment diversification rights rules, officials say.
The new rule “enforces that right by penalizing plan officials who fail to give workers the required notice,” says Bradford Campbell, assistant secretary of the Labor Department’s Employee Benefits Security Administration.