Message-ID: <17277092.1075860984917.JavaMail.evans@thyme> Date: Wed, 28 Nov 2001 16:52:01 -0800 (PST) From: jsarlat@33e.rjf.com Subject: Important info about your 401K plan Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: John Sarlat X-To: X-cc: X-bcc: X-Folder: \Michelle_Lokay_Mar2002\Lokay, Michelle\Personal X-Origin: Lokay-M X-FileName: mlokay (Non-Privileged).pst Dear Enron Employee, I am a retirement plan specialist with Raymond James & Associates (RJF-NYSE). I understand these are trying times at your company and I hope that your are not too heavily affected by the current distressed financial situation of your company. I once was employed by a company that filed bankruptcy so I speak from experience and have previously been placed in your precarious position. Being a retirement plan specialist, and having worked with associates that have Enron clients, I want to share some important information about your retirement plan benefits. Should you have any questions about retirement plans your queries are more than welcome. I want to make you aware that you are allowed to rollover into an individual IRA any portion of your retirement benefit plan which you have contributed to as an in service distribution provided you have met Enron's vesting requirement, which is either 2 or 5 years of participation. I would strongly recommend that it is probably a good idea to think about doing so with th exception of your Enron stock. There are other factors to consider however like the possibilty of forfeiting loan provisions should Enron pull through among others. Keep in mind however, that although your current asset holdings are protected by ERISA, should the company file bankruptcy those assets remaining in the company sponsored plan can be frozen for an unspecified amount of time, denying you access to your funds. An IRA rollover gives you more flexibility and choices of investments and seperates the assets from company control. If you have questions or need assistance in rolling over your plan assets please call me at 1-800-523-3295 from 8-5 EST or email me at jsarlat@33e.rjf.com. My personal and corporate website can be found at www.raymondjames.com/johnsarlat should you require more information about my personal or companies qualifications. Please inform your co- workers about their rights and options under the plan. Obviously time is of the essence! I wish you the best of luck and hope that the challenging environment changes for the better. I have included an article at the bottom of this page. . Sincerely, John Sarlat <<...OLE_Obj...>> John C. Sarlat Financial Advisor, Investments Raymond James & Associates Member NYSE/SIPC 2 Alhambra Plaza Penthouse 1-D Coral Gables, Florida USA 33134 (305) 461-1200 (Local) (800) 523-3295(TOLL FREE) By Andrew Kelly HOUSTON, Nov 28 (Reuters) - A flurry of lawsuits filed against ailing energy giant Enron Corp. ENE have highlighted potentially devastating consequences of employee retirement plans that lean heavily on investments in the employer's stock. Enron workers, whose jobs are at risk after rival Dynegy Inc. DYN terminated a buyout plan, have lost hundreds of thousands of dollars on Enron stock held in retirement accounts, wrecking dreams of a comfortable retirement for some. Retiree advocacy groups and attorneys said the big losses caused by the dizzying decline in Enron's share price have exposed fatal flaws in the 20-year-old retirement accounts known as 401 (k). "Employees are often encouraged to put a great deal of money in their employers' stock and the result can be disastrous," said Karen Ferguson off the Pension Rights Center in Washington D.C. Seattle-based attorney Lynn Sargo, who is pursuing one of four employee lawsuits against Enron and a similar case against telecommunications equipment giant Lucent Technologies Inc. LU, said the law governing 401 (k) plans must change. "It is clear that additional regulations need to be put in place because Lucent and Enron are both typical examples of large American corporations and if such a disaster can happen to them, then you have to ask if the current laws are adequate," he said. The suits filed against Enron and Lucent make similar allegations that executives failed in their fiduciary duty to employees by encouraging them to invest in company stock even when they knew their companies faced big problems. SIMILAR SCENARIOS AT ENRON AND LUCENT Enron and Lucent both saw their share prices fall steeply amid similar scenarios involving a severe loss of investor confidence, allegations of murky accounting, overoptimistic projections and the sudden departures of top executives. Enron's stock fell from a high of $90 in August 2000 to 90 cents on Wednesday. Lucent's stock fell from a December 1999 high of around $84 to a low in June 2001 of just over $5 and was trading at $7.66 on Wednesday afternoon. That has been painful for people like Enron employee Roy Rinard who were invested heavily in Enron stock. "I'm basically wiped out," said the 54-year-old Rinard, who lost over $400,000 as a result of investing all of the funds in his 401 (k) retirement account in Enron stock. Rinard says he now realizes that he broke a golden rule of investment: don't put all your eggs in one basket; spread your risks by diversifying your holdings. Traditional "defined benefit" retirement plans are subject to a 10 percent limit on investments in employer stock, but there is no such limit for "defined contribution" plans like the 401 (k). U.S. Senator Barbara Boxer tried a few years ago to have the same limit apply to 401 (k) plans, but the measure ran into vigorous opposition from employers who wanted to retain the right to make their matching contributions in their own stock. As the rules stand companies are allowed to make all of their matching contributions in their own stock and workers may also put all of their own money into company stock too. Diversification is thwarted in many cases by regulations that prevent employees from selling company stock before they reach a certain age -- 50 in Enron's case. James Delaplane of the American Benefits Council, an employer group, said the 401 (k) system places great responsibility for retirement savings on individual workers. "There are people who think that's the greatest thing since sliced bread and there are people who think that's the worst thing," he said. Delaplane said his organization wants to preserve employers' right to contribute company stock to employee retirement plans but also supports efforts to educate workers so that they can make better informed investment decisions. David Certner, a pensions specialist with the American Association of Retired Persons (AARP), said there is plenty of work to be done in that area. "Many employees aren't aware of basic rules of investing, nor of the meaning of diversification. Some actually view employer stock as a less risky investment than a mutual fund," he said.