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Once you know your specific plan’s Funding Percentage, your plan can be classified as one of the following:

OVERCAST: Some Pension Risk

HURRICANE: Imminent Pension Risk

Here are some notices you may – or may not – receive indicating your plan is in deep trouble:

1. ERISA § 101(d) Notice. SEPs that are underfunded must make the required minimum contributions in quarterly installments. The plan administrator must send you this notice if the plan fails to make a quarterly installment payment. This failure will generally result in an excise tax and a lien on the employer’s assets if the unpaid balance is more than a million dollars. However, if the plan sponsor is already in bankruptcy, it may be too late for PBGC to perfect an enforceable lien against the sponsor.

2. ERISA § 4242 Notice. If a MEP is in reorganization and increased contributions are required, this notice must be sent to the union and all contributing employers. This indicates your plan is in serious trouble. However, plan participants do not receive this notice. So if you suspect your plan is at great risk, you should ask your union representative or employer if such a notice has been sent.

Additional information which may classify a plan as facing imminent danger:

1. Bankruptcy. When a plan sponsor files for bankruptcy protection, it is not required to notify plan participants. However, bankruptcy is a public event. If your plan is fully funded, bankruptcy does not present a danger to benefits already earned, but future benefits will usually be reduced by bankruptcy proceedings.

2. Actives versus Inactives. Question number 7 on the Form 5500 gives the information to determine the percentage of actives to inactives. Consider your plan’s forecast a severe one with HURRICANE APPROACHING if the percentage of actives to inactives drops to less than 60%.

The rating system above covers both Single Employer Plans and Multiemployer Plans that are defined benefit pension plans subject to ERISA reporting and disclosure requirements.