Enron Bankruptcy and Employer Stock in Retirement Plans (CRS Report for Congress)
| Release Date |
Revised March 11, 2002 |
| Report Number |
RS21115 |
| Report Type |
Report |
| Authors |
Patrick J. Purcell, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
On December 2, 2001 the Enron Corporation filed for Chapter 11 bankruptcy protection in federal court in New York. Enron sponsors a retirement plan -- a '401(k)' -- for its employees to which they can contribute a portion of their pay on a tax-deferred basis. As of December 31, 2000, 62% of the assets held in the corporation's 401(k) retirement plan consisted of shares of Enron stock. Some Enron employees held even larger percentages of Enron stock in their 401(k) accounts. The company's bankruptcy substantially reduced the value of many of its employees' retirement accounts. Shares of Enron, which in January 2001 traded for more than $80 per share, were in January 2002 worth less than 70 cents each. The financial losses suffered by participants in Enron's 401(k) plan have prompted questions about the laws and regulations that govern these plans. This CRS [Congressional Research Service] Report describes the current laws governing the holding of employer stock in employee retirement plans and summarizes some key policy questions that pension analysts have raised about holding such stock in defined contribution retirement plans. This report will be updated as further legislative developments occur.
