ENRON EXPLAINS BASIC FACTS ABOUT ITS 401K SAVINGS PLAN

FOR IMMEDIATE RELEASE: Friday, December 14, 2001

HOUSTON – Enron Corp. (NYSE: ENE) today explained basic facts about its 401K savings plan. This explanation is being provided to correct numerous inaccurate news reports and statements from plaintiffs’ attorneys over the past several days.

When companies change the administrator of a 401K program, a temporary shutdown, typically lasting several weeks, is required to allow employee account information to be accurately and completely transferred to the new administrator.

In February of 2001, in order to improve its 401K plan, Enron requested proposals from third-party benefits firms to take over administration of its plan.

After selecting a new 401K administrator, Enron notified all affected employees in a mailing to their homes on October 4, stating that a transition period would begin on October 29. Between the first notification and the first day of the transition period, the company sent several reminders to employees over the internal e-mail system.

The transition period during which employees were unable to change investments in their 401K accounts lasted just 10 total trading days, beginning on October 29 and ending on November 12, 2001. The transition applied to all plan participants, including senior executives.

From October 29, the first day of the temporary shutdown, through November 13, the first day participants could transfer funds, the Enron share price went from $13.81 to $9.98, a drop of $3.83. On five of those trading days, Enron’s share price closed below $9.98.

Outside of the brief transition period, Enron employees have always been able to transfer their own contributions in the 401K, at any time. They have 20 investment options to choose from, Enron stock being one of them.

Until recently, the company provided a 50% match on employees' 401K contributions of up to six percent of the their base pay. The match comes from Enron holdings. As is the case with most company matching programs, the match was provided in company stock.

As is also the case in many company 401K programs, until recently, stock holdings from the company match could not be transferred into other investment options until the employee reached age 50.

Enron markets electricity and natural gas, delivers energy and other physical commodities, and provides financial and risk management services to customers around the world. Enron’s Internet address is www.enron.com. The stock is traded under the ticker symbol “ENE.”

Enron markets electricity and natural gas, delivers energy and other physical commodities, and provides financial and risk management services to customers around the world. Enron’s Internet address is www.enron.com. The stock is traded under the ticker symbol “ENE.”

These #$^#$^ers never stop trying to sell their stock!

When companies change the administrator of a 401K program, a temporary shutdown, typically lasting several weeks,

With todays computers this should only take hours if not minutes.

¿Several weeks ? This is Complete spin.

An employee puts in 6% of their pay, Enron gave them 50% match (3%) in Enron stock.
If that 1st 6% didn't have to be in Enron, these employees should of only had at MOST 1/3 of their nest egg in Enron.
Anymore money in Enron is poor financial planning.
Did an employee have to put their 1st 6% in Enron to get the 50% match?

Until recently, the company provided a 50% match on employees' 401K contributions of up to six percent of the their base pay. The match comes from Enron holdings. As is the case with most company matching programs, the match was provided in company stock.

Don't believe that this is the case with most companies. But if that is how ENRON set up their plan so be it. Totally legal

As is also the case in many company 401K programs, until recently, stock holdings from the company match could not be transferred into other investment options until the employee reached age 50.,/b.

Also, a totally legal rule. Looks like some overstatements about retirement savings being wiped out. Any one with half a brain knows that it is imprudent to invest 401k money in the company where they work. If the company goes down, it takes you with them.

What remains to be clarified is, was an exception to the Age requirement made in the case of Corporate Officers.

Please be aware, I'm not defending ENRON. There is plenty of wrong doing in my mind on the part of the Corporate Officers, the Board of Trustees and Andersen. But, when it comes to any 401k plan, it's your money and you can not be passive about where you put your money.

"The transition period during which employees were unable to change investments in their 401K accounts lasted just 10 total trading days, beginning on October 29 and ending on November 12, 2001. The transition applied to all plan participants, including senior executives."

What this tells me is privatizing social security is gonna be one giant mess. The rest is politics as usual.

Don't believe that this is the case with most companies. But if that is how ENRON set up their plan so be it. Totally legal

This is how ours is. They match with 50% in company stock and the other 50% is in what the employee decides.

I am very sad that these people lost their jobs, their 401(k) woes are not that different than MANY people over the past 2 years that got hammered who had mostly company stock as the primary investment vehicle in their 401(k). And that is, well, dumb. If their plan is anything like others, you get bombarded with literature from the 401(k) plan administrator that among other things, advises you to diversify. Many Enron employees did not and they paid for that failure.

But if that is how ENRON set up their plan so be it. Totally legal.

My employer has the same setup. The company match is provided in the form of the company's stock. I have about 15 other options to choose from and my own deductions go elsewhere.

Apart from the freeze which prohibited people from moving from one fund to another, a great deal of the fault lies with those who failed to follow investment rule number 1: Diversify.

When companies change the administrator of a 401K program, a temporary shutdown, typically lasting several weeks,

With todays computers this should only take hours if not minutes.

¿Several weeks ? This is Complete spin.

I can imagine that it could be quite an effort to transfer all of the 401k data for thousands of employees from one database to another, especially if the two systems are structured differently. 401k records would be considerably more complicated than:

Name:
Address:
SSN:
Total:

There would have to be individual records for every contribution by every employee in order to keep track of the vesting, and satisfy the IRS. If both 401k administrators were using the same database design, then it's just a matter of transfering records from one company to another. As another poster said: "Please be aware, I'm not defending ENRON. There is plenty of wrong doing in my mind on the part of the Corporate Officers, the Board of Trustees and Andersen.", but I would like to hear from a Freeper who does this sort of thing (401k plan administration) for a living before assuming that several weeks is an unreasonable length of time to transfer to a new administrator.

Of course, if you are the Freeper that does 401k plan administration for a living, then please ignore this post :-D

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