It’s time to end the tax deduction for a contribution of company stock to qualified retirement plans. It’s bad for employees, bad public policy, bad accounting and bad tax policy.

Here’s a modest suggestion: If you hold your employer’s stock in your 401(k) dump it; if you are a plan sponsor you should terminate any option for company stock in your plan. In fact, the SEC and Department of Labor should prohibit it.

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(MoneyWatch) Given the obvious benefits of diversification, why do investors take uncompensated risks by failing to hold highly diversified portfolios? This failure has its roots in two distinctly different reasons: lack of knowledge and human behavioral traits.

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How will 401(k) investors react to the latest blast of volatility in the markets?

If the recent past is any guide, they will retreat into the apparent safety of cash, Treasury bonds and “stable value” mutual funds.

They also will put money into their own company’s stock, which can be far riskier than leaving it in a typical stock mutual fund.

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