The regulations the Department of Labor published in the Federal Register on Thursday, August 9, stem from last year’s Pension Protection Act, which made it easier for workers to move their retirement savings out of company stock holdings and into other investments in the 401(k) plan.

In the past, companies often put strict limits on 401(k) participants’ ability to diversify out of company stock. The PPA said that employees who invest in company stock with their own contribution to the plan can switch out of it at any time, while employees who acquire company stock from the company’s contribution can diversify out of it once they’ve achieved three years of service.

Employers are required to give workers 30 days’ notice of the point at which they’re eligible to diversify out of company stock, and the department’s regulations put some teeth into that requirement by setting the fine of as much as $100 a day per violation.

Enron’s collapse illustrated the dangers of putting too much of one’s retirement savings into an employer’s stock, and that message seems to be getting through to workers. The latest look at 401(k) plan activity by the Employee Benefit Research Institute and the Investment Company Institute found that employees’ holdings of company stock fell two percentage points in 2006, to 11 percent; that compares with the 1998 peak in company stock holdings of 18.6 percent.

The regulations take effect October 9.

Filed by Susan Kelly of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.