WORKERS everywhere shuddered last year to see Enron Corp. employees lose their retirement savings because of the heavy concentration of company stock in their 401(k) accounts.

Despite this riches-to-rags story, not much has changed with 401(k)s to guard against such disasters.

Many employees continue to hold too much company stock in their accounts, experts say. An August survey of more than 300 plans by the newsletter DC Plan Investing found that on average 28 percent of 401(k) assets were in employer stock. In a dozen plans workers had more than 75 percent of their money in company shares.

Federal legislation to protect workers hasn't gone far, either.

A proposal to limit how much company stock an employee can hold in a 401(k) account has lacked support, particularly with labor unions, said Ted Benna, president of the 401(k) Association in Pennsylvania and widely credited with creating the first 401(k). Other legislation to provide financial advice to 401(k) participants has been stalled largely over a dispute over who should be giving the advice, he said.

The Labor Department issued a rule last month that will require workers beginning next year to be notified 30 days in advance of a blackout period, when they can't access their accounts because of administrative changes. But that would have little, if any, effect on preventing another Enron, Benna said. What change has occurred in light of Enron has come from employers, experts said.

Some companies that use their stock to match worker contributions have lifted or eased restrictions on when workers can sell those shares, said Lori Lucas, a consultant for Hewitt Associates in Chicago. Such restrictions typically prohibit workers from selling the stock until they are in their 50s, which was the case with Enron.

Also, more companies intend to educate workers about diversification, she said.

Still, if workers want to protect themselves from the downside risk of employer's stock, they can take action themselves.

Some experts advise against owning any company shares in a 401(k), if possible, because then workers' jobs and retirement savings will hinge on the company's performance. Others suggest that a single stock should not make up more than 10 percent or 20 percent of an investor's entire portfolio, which includes the 401(k) and outside investments.

Still, it may be hard to wean workers from employer stock.

When companies match workers' contributions with stock, workers often interpret that as an endorsement and buy more shares on their own, said Louis Berney, an editor with DC Plan Investing.

It's easy for shares to pile up because once workers make their initial investment decision, "most don't make changes," Berney said. "The key word is inertia."

Workers also like to invest in a company they know well, overestimate the outlook for employer stock and often don't think an Enron-like catastrophe can happen to them, experts said.

"Unfortunately, just because there is a good business out there doesn't mean their stock won't go down precipitously. It's not just Enron. Look at General Electric," said Jonathan Murray, a senior vice president with Legg Mason Wood Walker Inc. in Baltimore.

Many GE employees loaded up on the stock and figured they were diversified because of the company's various businesses, Murray said. Yet the stock has fallen from over $60 a share to the $20s, he said. The best way to avoid getting burned like that, experts said, is to go back to basics: asset allocation and rebalancing.

Asset allocation is deciding what percentage of money will be held in stocks, bonds and cash based on investors' goals, risk tolerance and when they'll need the money.

Rebalancing involves reviewing your portfolio each year and making sure that swings in investments haven't thrown your asset allocation out of whack. If your target allocation has shifted by 5 percentage points or more, say, you now have 65 percent in stock rather than 60 percent, then you should rebalance, Benna said.

In a 401(k), that means transferring money out of higher-performing investments and putting the dollars into those that haven't done as well.

"There is probably not a better market than today to rebalance," said Michael Scarborough of the Scarborough Group in Annapolis. Bonds have been outperforming stocks in recent years, and now is a good time to take profits from bonds and shift money into stocks, he said.

To suggest a column idea, contact Eileen Ambrose at 410-332-6984 or by e-mail at eileen.ambrose@baltsun.com.