Final answer:
Without specific terms of ADM, Inc.'s ESOP plan, we cannot definitively answer whether Elizabeth can diversify up to $1,000,000 of her ESOP account balance. However, the question around Alexx and Spenser's investments can be answered by calculating the future value of their respective investments at the different growth rates over 30 years.
Step-by-step explanation:
The question posed is concerning the rules about diversification options for an Employee Stock Ownership Plan (ESOP). However, the information required to ascertain the validity of this statement is not provided here. To give an accurate answer, one would need to know the specific terms of ADM, Inc.'s ESOP, as these plans can vary in their diversification options and requirements. Generally, some ESOPs have diversification requirements that align with Section 401(a)(28) of the Internal Revenue Code, allowing participants who have reached a certain age and have participated in the plan for a specific number of years to diversify a portion of their ESOP accounts. Typically, participants may diversify up to 25% of the employer securities that were allocated to their account before the plan year that commenced after they attained 55 years of age and had 10 years of plan participation. The diversification amount usually increases to 50% in later years.
For example, if Alexx and Spenser each invested $5,000 in the same stock and Alexx earns 5% per year while Spenser earns 4.75% due to a 0.25% administrative fee, after 30 years, the difference in their investments would be as follows:
Alexx's investment: $5,000 × (1 + 0.05)^{30}
Spenser's investment: $5,000 × (1 + 0.0475)^{30}
The exact amount more that Alexx would have than Spenser can be calculated by finding the future value of the investments for both individuals and then subtracting Spenser's amount from Alexx's amount.