Choose wisely. There is only one correct answer to each question.
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1.
It's possible to own shares of your company's stock in places other than your company retirement plan or stock options.
True. For example, mutual funds might hold them, or you might have an additional retirement plan that holds them.
2.
If their investment goal is less than five years away, how much of their company's stock should most investors own at most?
10%. If your company's stock hits a bad streak right before you need the money, you may not be able to reach your goal.
3.
If you decide to sell some of your company stock but will owe significant capital gains taxes on the growth of those shares, what might be the least painful thing to do?
Sell the shares over a series of years to spread out the tax hit. This is the happy medium for most investors. You're managing your taxes and your risk at the same time.
4.
If you find that you're over-invested in your company and your goal is more than five years away, what should you do?
Objectively analyze your company's stock as you would any other investment and determine whether or not you should scale back your position. You may find that, given your goals and risk tolerance, you can continue to overweight your company's stock if it's a good investment. Don't assume that you can just do nothing, though. Treat company stock like any other investment.
5.
As part of the 1997 Taxpayer Relief Act, employers can no longer direct more than _______ of their employees' retirement plan contributions into company stock.
10%. The Taxpayer Relief Act aimed to limit employers' use of company stock for retirement plans.
