In the case of defined benefit plans that are less than 90 percent funded, you must be notified each year about the plan's funding status and PBGC's guarantees.

Protecting Your Benefits In The Event Of Plan Terminations And Mergers

This section describes what might happen to your benefits if your employer decides to terminate or merge your retirement plan with another plan. It covers the following questions:

• What happens if your plan terminates without enough money to pay the benefits?
• If your plan terminates before you are vested, will you lose your benefits?
• Under what circumstances is your benefit guaranteed by the government?
• Can your benefits be reduced as the result of a merger?

Can a plan be terminated?

Although retirement plans must be established with the intention of being continued indefinitely, employers may terminate plans. If your plan terminates or becomes insolvent, ERISA provides some protection. In a tax-qualified plan, your accrued benefit must become 100 percent vested immediately upon plan termination, to the extent then funded. If a partial termination occurs in such a plan, for example, if your employer closes a particular plant or division that results in the termination of a substantial portion of plan participants, immediate 100 percent vesting, to the extent funded, also is required for affected employees.

What happens if your plan terminates without enough money to pay the benefits? Which benefits are guaranteed?

If your terminated plan is a defined benefit plan insured by the Pension Benefit Guaranty Corporation, the PBGC will guarantee the payment of your vested pension benefits up to the limits set by law. Benefits that are guaranteed or that exceed PBGC's limits may be paid depending on the plan's funding and on whether PBGC is able to recover additional amounts from the employer. For further information on plan termination guarantees, write to the Pension Benefit Guaranty Corporation, Administrative Review and Technical Assistance Department, 1200 K Street, N.W., Washington, D.C. 20005, telephone 202.326.4000.