IT'S GREAT TO have confidence in your company, but the old adage "buy what you know" can be a bad idea especially when it comes to your retirement plan. So what does one in every two workers who can invest in his employer's stock do? You got it: He owns it.

More than seven years after Enron and mere months after the Bear Stearns debacle, many big firms are still encouraging employees to invest in their stock. Much of that encouragement comes by way of matching individual 401(k) contributions in company stock; bonuses are often paid in stock as well. According to financial planners, it's that kind of "incentive" that is keeping too many Americans tied to their employers' stock. "Everyone talks about the secretary who got rich with stock options, but no one talks about Enron or Washington Mutual," says Kristi Mitchem, head of Barclays' Defined Contributions business.

For their part, companies with in-house investment plans say encouraging employees to own stock creates an ownership culture; in fact, when companies try to take their stock out of their retirement plan, employees often complain. "It's an opportunity for people to identify with and appreciate the company," said Joe Devine, the global head of benefits at Monsanto, which matches employees' 401(k) contributions in shares. Even so, the number of firms stuffing stock into retirement accounts has dropped; about one in 10 firms matches its employees' retirement contributions with shares of the company, down from nearly one in four back in 2001, according to consulting firm Hewitt Associates.

But too many companies still push their own stock, experts say, and the number of workers invested is still high. What's more, employees often interpret the match as a tacit endorsement and invest even more money. Yet planners say owning too much of any single stock is risky, and when it's the company you work for, there's an extra layer of danger. If your employer hits hard times, your stock gets clobbered more than 30 percent of Bear Stearns stock was owned by employees, for example and your job is at risk as well. And ask Lehman Brothers' employees how they feel about their midyear compensation, a large portion of which was paid in stock in early July. A week later, Lehman shares had fallen 40 percent.

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Matching stock or not, financial planners recommend allocating no more than 5 percent to your employer's stock. For Michael Scarborough, a money manager in Maryland, even that is too much: "I'd prefer zero."

Careful What You Wish For

Some of the biggest firms match their employees' 401(k) contributions with shares in their company.

Company	Ticker	Plan Assets ($bil)	Amount in Co. Stock (%)	Comment
Sources: Standard & Poor's money market directories; securities and exchange commission
AXA Equitable		1.7	10	Matches in stock; employees can sell immediately.
Eaton		1.6	46	Ohio industrials company stopped matching in stock six years ago.
Monsanto		2.2	18	A big match is paid in stock, which is up 67 percent in the past year.
Procter & Gamble		1.2	43	Puts stock in a profit-sharing plan; employees purchase it in 401(k)s.
Verizon		18.0	30	Matches in stock, which is down 12 percent in the past year.

Also See:
The Three Biggest Retirement Fear Factors
Got a 401(k) Question?
SmartMoney Retirement Guide