NEW YORK (CNNMoney.com) – As corporate cautionary tales go, the demise of Enron wins the Holy Moly Prize in every way, but no way more so than as a nightmarish illustration of the risks of having too much company stock in your 401(k).

Enron workers lost the lion's share of their retirement money as the company's once-high-flying stock became all but worthless by the end of 2001.

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In addition to receiving their matching contributions in Enron stock – which they were prohibited from selling until they were 50 – many Enron workers invested their own 401(k) contributions in company shares.

Four years later, there have been some improvements on the 401(k) front that may help prevent workers from losing their shirts the way Enron employees did, but there's still progress to be made. Among the improvements are:

One of the biggest lessons from Enron workers' misfortune is the peril of having too much money invested in your employer.

That lesson hasn't been lost. Back in 2001, 19 percent of all money in 401(k) plans was invested in company stock, said Dallas Salisbury, president and CEO of the Employee Benefit Research Institute. At the end of 2004, company stock only accounted for 15 percent of total assets.

And fewer companies are even offering the option, according to Hewitt. In 2005, 43 percent of companies offered company stock as an investment option, down from 55 percent in 2001.

What's more, a majority of employers offer investment education and 37 percent offer outside investment advisory services to employees.

Ultimately, though, workers will have to exercise the greatest self-restraint and keep themselves informed about the prospects for a company stock if they own it.

Not that it's a crazy notion to invest in company stock. EBRI data show that three-quarters of workers who invested in company stock got better returns overall than those who didn't, Salisbury said.

So if you're willing to actively monitor the stock, view it dispassionately and sell before it's too late, he said, buying company shares is a legitimate option.

But given that your income and job security are riding on your company's fortunes, it greatly compounds your risk of loss if a large portion of your savings is, too.

Among those employers that make their matching contribution in company stock, as Enron did, only a small minority still insist workers must hold onto that stock until their 50s, which used to be the norm, said David Wray, president of the 401(k)/Profit-Sharing Council of America.

Still, only 46 percent of employers that make matching contributions in stock allow that stock to be sold at any time, according to Hewitt Associates. So more than half still place some time restriction on selling. Lawmakers currently are debating pension reform, and one provision that made it into a bill passed by the Senate would allow all 401(k) participants to move out of company stock after three years.

There also is no law requiring companies to limit the amount of company stock a 401(k) participant may choose to buy. But there has been a small increase in employers who place restrictions.

Last year, 17 percent of companies restricted the amount of company stock a worker may have as a percent of his account assets, up from 14 percent in 2001, Hewitt data show.

It is still the case, though, that an employer may prohibit workers from making any trades in their accounts during what's known as a blackout in a 401(k), which may be imposed when the employer is changing plan providers.

Much has been made of the blackout imposed in Enron's plan in the fall of 2001. During that period, which lasted about a month, all Enron workers in the 401(k) -- not just those under 50 -- were prevented from selling any company stock in their accounts.

While the stock fell sharply during that period, workers' most severe losses occurred during the nine months prior. But many did not sell.

In the wake of Enron's fall, a provision was included in the Sarbanes-Oxley Act of 2002 requiring companies to give plan participants at least 30 days' notice prior to a blackout period.

After Enron, the Department of Labor instituted an information campaign to better acquaint 401(k) plan fiduciaries with their responsibilities. Fiduciaries are charged with setting up the 401(k) in the exclusive best interest of the participants, choosing and monitoring the investment options, and making sure that they are sound.

The consequences of flouting those responsibilities can include fines as high as $1,000 a day and lawsuits in which not only the company but individual fiduciaries can be held liable, said Rick Applegate, a registered investment adviser for 401(k) plans.

The Department of Labor sued Enron, its board of directors as well as top executives, charging them with, among other things, failing to consider the prudence of Enron stock as an investment in the retirement plan and doing nothing to protect workers from extensive losses.

The suit was settled this past summer. As a result, the DOL said it expects Enron plan participants should be able to recover tens of millions of dollars. The agency said the agreement does not, however, settle its claims against Kenneth Lay or Jeffrey Skilling.

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