Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-12-36051/USCOURTS-ca9-12-36051-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RANDAL ANDERSEN; QUIN ARNOLD;

GILBERT ARTER; JAMES DEWEY

ASHBY, JR.; LYNN BATAYOLA;

CAROL BLANKFIELD; DAVID A.

BOOZER; SHARON ANN BRAUN,

AKA Sharon Ann Sanders; DAVID

BRENT; JACQUELINE BROWN;

RANDY BUCHANAN; LORETTA

BUCKHOLZ; ROBERT CASSIDY;

THOMAS CLARK; TRACY CLARK;

LAURA COCHRANE; PATRICK

CURRY; WALLACE DANIELSON;

KRISTEN DELARA; SHARON

DENISON; WILLIAM DENTON; JOSEPH

DINICOLA; BARBARA DREISOW;

BRENDA DREISOW, Estate of; JYL

EIDEMILLER; ELAINE ELLISON; LYNN

EPSTEIN; ELIZABETH FIELDS;

ROBERT FORST; CRAIG FUNCKE;

CAROLYNE GARRIS; THOMAS

GLADIS; STEVEN HALL; GERARD

HEMPSTEAD; MICHELLE

HIGHTOWER; RICHARD HOBT;

JUDITH KENNEDY; LYNN KNIGGE;

JENNIFER KRAUSE; GLORIA

MACINNIS; DEBORAH MAHANAY;

CAROL MANESS; DIANE MCCARTY;

JUNE MCGARVEY; STEVEN MEHL;

MEEGAN MOUTSAKAS; MARK NEILS;

No. 12-36051

D.C. No.

2:12-cv-00439-

MJP

OPINION

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2 ANDERSEN V. DHL RETIREMENT PENSION PLAN

JUDI O’HURLEY; DIANE ORMSTON;

LINDA PATCHELL; GLORIA PRINCE;

LYNN RAMSEY; CAROL RUDISUHLE;

JOYCE S SEIFERT; ROBERT SEVERINI;

ERNEST SHARPE; MICHAEL SHEA;

PAMELA SPRING; KATHRYN

TERLIZZI; ANTHONY THOMAS;

DOUGLAS THOMAS; PAMELA JEAN

THOMAS; JOHN VOGLER; KATHERINE

M. WAGGONER; MICHAEL WARD;

ROB WILDER; STEVEN WILLIAMS;

LESLIE WILLMAN; JOANNE WIND;

DEBRA ANN WINTER; NANCY

WRIGHT; DELOIS WYATT; ROXANNA

ZABORAC,

Plaintiffs-Appellants,

v.

DHL RETIREMENT PENSION PLAN;

DPWN HOLDINGS (USA), INC.; DHL

PENSION PLAN COMMITTEE, AKA

Employee Benefits Pension Plan

Committee of DPWN Holdings

(USA) Inc.,

Defendants-Appellees.

Appeal from the United States District Court

for the Western District of Washington

Marsha J. Pechman, Chief District Judge, Presiding

Argued November 8, 2013

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 3

Submitted September 8, 2014

Seattle, Washington

Filed September 15, 2014

Before: Mary M. Schroeder, Richard A. Paez,

and Marsha S. Berzon, Circuit Judges.

Opinion by Judge Berzon

SUMMARY*

Employee Retirement Income Security Act

Affirming the district court’s dismissal of an action under

the Employee Retirement Income SecurityAct, the panel held

that defendants’ decision to eliminate plaintiffs’ right to

transfer their account balances from a defined contribution

plan to a defined benefit plan did not violate ERISA’s anticutback rule.

The anti-cutback rule prohibits any amendment of an

employee benefits plan that would reduce a participant’s

“accrued benefit.” Plaintiffs were former employees of

Airborne Express, Inc., who participated in both Airborne’s

defined benefit pension plan and its defined contribution plan. 

The defined benefit pension plan was a floor-offset plan. 

That is, its benefits were calculated on the basis of a

participant’s final average compensation and years of service,

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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4 ANDERSEN V. DHL RETIREMENT PENSION PLAN

with an offset for any account balance in the defined

contribution plan. Before the challenged amendment,

participants could transfer the funds from their defined

contribution plan accounts to the defined benefit plan’s

general pool before the participant’s benefits were calculated. 

DHL acquired Airborne and merged the two companies’

retirement plans, amending the benefit plan to eliminate

participants’ right to transfer funds into that plan.

The panel agreed with the district court and the First

Circuit that the amendment did not violate the anti-cutback

rule, but it took a different path in reaching that conclusion. 

The panel deferred to the amicus brief of the government

insofar as it interpreted Treasury Regulation A–2, which

provides that, without violating the anti-cutback rule, a plan

may be amended to eliminate provisions permitting the

transfer of benefits between and among defined contribution

plans and defined benefit plans. The panel also gave some

weight to the government’s statutory interpretation. The

panel held that the anti-cutback rule was not violated because

the plan amendment did not reduce a participant’s accrued

benefit in either the defined contribution plan or the defined

benefit plan. The panel declined to decide whether the

elimination of the transfer option was a “cutback” because the

transfer option was an “optional form of benefit” under the

anti-cutback rule. The panel concluded that if the transfer

option were an optional form of benefit, then it would fall

within the regulatory exception.

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 5

COUNSEL

Robert S. Catapano-Friedman (argued), The CatapanoFriedman Law Firm, Albany, New York; Michael E. Withey,

Law Offices of Michael E. Withey, Seattle, Washington, for

Plaintiffs-Appellants.

Brian T. Ortelere (argued) and Jeremy P. Blumenfeld,

Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania;

Nicole A. Diller, Morgan, Lewis & Bockius LLP, San

Francisco, California; Michael P. Monaco, Song Mondress

PLLC, Seattle, Washington, for Defendants-Appellees.

Kathryn Keneally, Assistant Attorney General, Tamara W.

Ashford, Principal Deputy Assistant Attorney General,

Gilbert S. Rothenberg, Teresa E. McLaughlin, and Ivan C.

Dale, Attorneys, Tax Division, United States Department of

Justice, Washington, D.C., for Amicus Curiae United States.

OPINION

BERZON, Circuit Judge:

The “anti-cutback” rule of the Employee Retirement

Income Security Act of 1974 (“ERISA”), 29 U.S.C.

§ 1054(g), prohibits any amendment of an employee benefits

plan that would reduce a participant’s “accrued benefit.” Our

question is whether Defendants’ (collectively, “DHL”)

decision to eliminate Plaintiffs’ right to transfer their account

balances from DHL’s defined contribution plan to its defined

benefit plan violated the rule. We hold it did not.

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6 ANDERSEN V. DHL RETIREMENT PENSION PLAN

I.

Plaintiffs are former employees of Airborne Express, Inc.

(“Airborne”) who participated in both Airborne’s defined

benefit pension plan (“the Retirement Income Plan”) and its

defined contribution plan (“the Profit Sharing Plan”).1 The

Retirement Income Plan is a so-called floor-offset plan. That

is, its benefits are calculated on the basis of a participant’s

final average compensation and years of service, with an

offset for any account balance in the Profit Sharing Plan.

A floor-offset feature works as follows:

The employee’s annual benefit in the defined

benefit pension — the floor — is offset by the

annual annuity value of the [defined]

contribution plan. (The annual annuity value

of a defined contribution plan . . . is the dollar

amount available each year if the account

balance at retirement were used to purchase

an annuity, using standard assumptions for

interest rates and life expectancy.) . . . .

Essentially, a . . . guaranteed benefit level is

established in the defined benefit plan —

based on age,service and/or compensation. If

1

“A defined contribution plan is one where employees and employers

may contribute to the plan, and the employer’s contribution is fixed and

the employee receives whatever level of benefits the amount contributed

on his behalf will provide. . . . A defined benefit plan . . . consists of a

general pool of assets rather than individual dedicated accounts. Such a

plan, as its name implies, is one where the employee, upon retirement, is

entitled to a fixed periodic payment.” Hughes Aircraft Co. v. Jacobson,

525 U.S. 432, 439 (1999) (citations and quotation marks omitted).

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 7

the annuity value of the defined contribution

plan is equal to or greater than the guaranteed

level of the [defined benefit] plan, all of the

benefit will come from the [defined

contribution] plan. However, if the annuity

value of the account balance of the [defined

contribution] plan is less than the guaranteed

benefit of the [defined benefit] plan, the

[defined benefit] plan will make up the

difference.

U.S. Dep’t of Labor, Bureau of Statistics, Employee Benefits

Survey, People Are Asking . . . What is a floor-offset plan?,

http://bls.gov/ncs/ebs/peopleboxfloorpl.htm (last modified

May 9, 2002). If, for example, a participant was entitled to

receive $5,000 in monthly benefits under the Retirement

Income Plan but had a balance in the Profit Sharing Plan that

would equate to a $3,000 monthly annuity, he would receive

a monthly benefit of $2,000 from the Retirement Income

Plan. If his balance in the Profit Sharing Plan would equate

to a $6,000 monthly annuity, he would receive nothing from

the Retirement Income Plan.

Before the amendment challenged here, participants could

transfer the funds from their Profit Sharing Plan accounts to

the Retirement Income Plan’s general pool before the

participant’s benefits were calculated. The transfer option

was described in section 7.11 of Airborne’s Retirement

Income Plan:

A Participant may transfer his/her

nonforfeitable Employer Profit Sharing Plan

account balance to this Plan in order to be

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8 ANDERSEN V. DHL RETIREMENT PENSION PLAN

paid an annuity benefit from such transferred

account balance.

This transfer option, if exercised, provided increased funds

for the Retirement Income Plan. It also allowed participants

to drop their Profit Sharing Plan balances to zero, eliminating

any offset when the benefit payable from the Retirement

Income Plan was calculated. So, in the first example

provided above, if a participant transferred the entire balance

of his Profit Sharing Plan account to the Retirement Income

Plan when he retired, he would be entitled to (at least) the full

$5,000 monthly annuity from the Retirement Income Plan;2

2 Plaintiffs have described the effect of the transfer as reducing the offset

to zero, rather than increasing the amount of the benefit payable under the

Retirement Income Plan. DHLhas not disputed this characterization. The

plain text of the Retirement Income Plan suggests otherwise. Section 7.11

provides, in full:

[a] Participant may transfer his/her nonforfeitable

Employer Profit Sharing Plan account balance to this

Plan in order to be paid an annuity benefit from such

transferred account balance. If a Participant elects to

transfer his/her nonforfeitable Employer Profit Sharing

Plan account balance to this Plan, the benefit payable to

the Participant shall be the Actuarial Equivalent,

pursuant to Section 4.01C (as determined under this

Plan), of the value of the Employer’s Profit Sharing

Plan account balance as transferred to this Plan for such

Participant.

This provision strongly suggests that the amount of a participant’s annuity

benefit under the Retirement Income Plan varied depending on the value

of the Profit Sharing Account balance transferred into the Retirement

Income Plan. As the exact mechanism by which the transfer affects the

Retirement Income Plan annuity value is not material to our decision, we

need not resolve the apparent discrepancy between the parties’ assertions

and the terms of the plan.

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 9

he would, of course, have nothing remaining in his Profit

Sharing Plan account, and would therefore be paid nothing

from that account.3

In 2003, DHL acquired Airborne and began a process of

merging the two companies’ retirement plans. All relevant

features of Airborne’s plans were preserved in the merger,

with one exception: on December 31, 2004, DHL eliminated

the right of participants to transfer their account balances

from the Profit Sharing Plan to the Retirement Income Plan. 

It did so by amending section 7.11 of the Retirement Income

Plan to “add[] the following to the end thereof:

Notwithstanding the foregoing, the [Retirement Income] Plan

shall not accept transfers of any Profit Sharing Plan account

balances after December 31, 2004.” The Profit Sharing Plan

was not amended; it continues to allow transfers to any

eligible retirement plan that will accept them. As we discuss

in Part III, due to differential actuarial assumptions used in

the two plans, the elimination of the right to transfer these

funds into the Retirement Income Plan caused many

participants in the two plans to receive reduced overall

periodic benefits.

The Tasker litigation. On February 11, 2009, former

Airborne employee JeffreyR. Tasker sued DHL alleging that

the December 31, 2004 elimination of the transfer option

violated ERISA’s anti-cutback rule. Tasker’s case is

instructive in understanding the magnitude of the benefits

3 As we explain below, whether exercising the transfer option was

financially beneficial for any individual participant would depend on the

value and performance of the investments in his Profit Sharing Plan

account.

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10 ANDERSEN V. DHL RETIREMENT PENSION PLAN

reduction Plaintiffs could experience as a result of the plan

amendment:

After more than thirty-two years of service,

Tasker retired on March 4, 2004. As of the

end of 2003, his [Profit Sharing Plan] balance

was $370,338.22. At his retirement, he

received a benefits estimate stating that his

single life annuity under the [Retirement

Income Plan] alone would be . . . $4,163.92

per month . . . if he transferred his [Profit

Sharing Plan] balance into the [Retirement

Income Plan]. Tasker selected . . . [that]

option, to begin payments upon his request on

or after October 1, 2008. In April 2008,

Tasker learned . . . that his expected monthly

benefits were approximately $2,200.00, not

$4,163.92. . . . [T]he 2004 figure was higher

because it contemplated Tasker’s exercise of

his transfer right — a right that was

subsequently eliminated.

Tasker v. DHL Ret. Sav. Plan, No. 09-CV-10198-NG, 2009

WL 4669936, at *2 (D. Mass. Nov. 20, 2009), aff’d, 621 F.3d

34 (1st Cir. 2010).

The district court dismissed Tasker’s complaint, holding

that a United States Department of the Treasury regulation

(“Regulation A–2”) specifically permits the elimination of a

transfer right, even when “such transfer may reduce or

eliminate protected benefits.” Id. at *5. Pursuant to

Regulation A–2, the court concluded, a transfer right “may be

eliminated without running afoul of the anti-cutback rule.”

Id. The First Circuit affirmed. Tasker, 621 F.3d at 40.

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 11

The current action. On March 12, 2012, Plaintiffs

brought this action against DHL, also alleging that DHL’s

elimination of the transfer option violated the anti-cutback

rule. The complaint alleges that “[s]ome of the Plaintiffs

[who] have already applied for their pension benefits” were

denied the right to transfer their Profit Sharing Plan account

balances to the Retirement Income Plan, and “are now

receiving . . . benefits of far less value than the amount to

which they were fully vested and to which they were

entitled.” Others have not yet applied for their benefits, but

assume that their benefits will likewise “be substantially

reduced because of [the] unlawful plan amendment.”

The district court granted DHL’s motion to dismiss the

complaint, citing the First Circuit’s analysis in Tasker. Ten

days later, Plaintiffs filed a motion for reconsideration

asserting, inter alia, that the Secretary of the Treasury

(“Secretary”) exceeded his statutory authority in

promulgating Regulation A–2. The district court denied the

motion, holding that “[n]either Rule 59(e) nor 60(b) of the

Federal Rules of Civil Procedure permitreconsideration when

a party simply fails to raise an argument it could have

previously.” It went on to state, however, that reconsideration

would also be denied on the merits because “[i]t is not

obvious that the Secretary’s broad authority falls short of

encompassing the regulation at issue here.” Plaintiffs filed a

timely notice of appeal.

Following oral argument, we invited the United States

Department of Labor and Department of the Treasury to

submit an amicus curiae brief addressing whether DHL’s

“elimination of Plaintiffs’ right to transfer their account

balances from the defined contribution plan to the defined

benefit plan violate[d] the anti-cutback rule . . . , where the

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12 ANDERSEN V. DHL RETIREMENT PENSION PLAN

result of the elimination of the transfer option was

significantly to decrease the periodic benefits paid from the

defined benefit plan and in total.” The government filed a

brief answering that question in the negative and

recommending that the panel affirm the district court. 

Plaintiffs filed a responsive brief.

We review de novo the district court’s dismissal for

failure to state a claim pursuant to Federal Rule of Civil

Procedure 12(b)(6). See Knievel v. ESPN, 393 F.3d 1068,

1072 (9th Cir. 2005).

II.

ERISA’s “anti-cutback rule is crucial to” the statute’s

“central[] . . . object of protecting employees’ justified

expectations of receiving the benefits their employers

promise them.” Cent. Laborers’ Pension Fund v. Heinz,

541 U.S. 739, 743–44 (2004). “‘Nothing in ERISA requires

employers to establish employee benefits plans. Nor does

ERISA mandate what kind of benefits employers must

provide if they choose to have such a plan. ERISA does,

however, seek to ensure that employees will not be left

emptyhanded once employers have guaranteed them certain

benefits.’” Id. at 743 (quoting Lockheed Corp. v. Spink, 517

U.S. 882, 887 (1996)).

The anti-cutback rule therefore provides that “[t]he

accrued benefit of a participant under a plan may not be

decreased by an amendment of the plan.” 29 U.S.C.

§ 1054(g)(1). It further establishes that “a plan amendment

which has the effect of . . . eliminating an optional form of

benefit, . . . shall be treated as reducing accrued benefits.” Id.

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 13

§ 1054(g)(2)(B).4 ERISA, however, explicitly authorizes the

Secretary to make exceptions to the anti-cutback rule’s broad

mandate:

The Secretary of the Treasury shall by

regulations provide that this paragraph shall

not apply to any plan amendment which

reduces or eliminates benefits or subsidies

which create significant burdens or

complexities for the plan and plan

participants, unless such amendment

adversely affects the rights of any participant

in a more than de minimis manner. The

Secretary of the Treasury may by regulations

provide that this subparagraph shall not apply

to a plan amendment described in

subparagraph (B)[, concerning an “optional

form of benefit”].

Id. § 1054(g)(2)(B).

The Internal Revenue Code contains a “substantially

identical” provision, Heinz, 541 U.S. at 746, conditioning

eligibility for tax breaks on a pension plan’s compliance with

ERISA’s anti-cutback rule. See 26 U.S.C. § 411(d)(6).5 The

Secretary has “the ultimate authority to interpret these

4 We discuss whether the transfer option was an “optional form of

benefit” in Part II(C) of this opinion.

5 Though the substance of the ERISA and Internal Revenue Code

versions of the anti-cutback rule is the same, the numbering systems are

different. For example, Paragraph (1) in ERISA is Paragraph (A) in the

Internal Revenue Code. To avoid confusion, we cite to ERISA’s anticutback rule.

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14 ANDERSEN V. DHL RETIREMENT PENSION PLAN

overlapping anti-cutback provisions.” Heinz, 541 U.S. at

747. Where “regulations refer only to the Internal Revenue

Code version of the anti-cutback rule, they apply with equal

force to” ERISA’s version of the rule. Id.

Pursuant to his authority, the Secretary promulgated

Regulation A–2, which addresses transfer rights:

Q–2: To what extent may [anti-cutback rule]

protected benefits under a plan be reduced or

eliminated?

A–2: . . . A plan may be amended to eliminate

provisions permitting the transfer of benefits

between and among defined contribution

plans and defined benefit plans.

26 C.F.R. § 1.411(d)–4, Q & A–2(b)(2)(viii). Plaintiffs

contend that although “the elimination of the transfer option

. . . by itself did not violate the anti-cutback rule under [this]

regulatory exception,” the fact that the amendment resulted

in a reduction of “the total monthly annuity amount

guaranteed to pensioners” did violate the anti-cutback rule.

The First Circuit in Tasker and the district court in this

case held that the plain language of Regulation A–2

foreclosed this argument. Tasker noted that “[t]he question

posed [in this case] directly tracks Q–2 of the regulation: did

the defendants violate the anti-cutback rule . . . by eliminating

the transfer option, when that elimination had the incidental

effect of significantly lowering the plaintiff’s projected

benefit?” 621 F.3d at 40. “The answer, a clear ‘no,’ directly

tracks the teachings of A–2: [DHL may eliminate the transfer

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 15

right] even if that elimination reduces an accrued (but

unclaimed) benefit.” Id.

The district court in this case likewise reasoned that

Regulation A–2 “can only logically be read to mean the

regulation allowing the elimination of the ability to transfer

funds contemplates that such a transfer may reduce or

eliminate protected benefits.” The district court held that

Plaintiffs’ interpretation — that Regulation A–2 allows

elimination of a transfer benefit only if it results in no

monetary reduction of retirement benefits — ignores the

question posed by the regulation: “to what extent may . . .

protected benefits . . . be reduced or eliminated?” 26 C.F.R.

§ 1.411(d)–4, Q–2. For this reason, the district court agreed

with the First Circuit that Regulation A–2 provides a “clear

grant of safe passage for plan amendments that eliminate

transfer options (even when the elimination may have the

incidental effect of reducing benefits).” Tasker, 621 F.3d at

39.

We agree with the First Circuit and the district court here

that DHL’s 2004 plan amendment did not, as a matter of law,

violate the anti-cutback rule. But, with the guidance of the

government’s amicus brief, we take a different path in

reaching that conclusion. Additionally, we note below that

although the result reached here is disturbing given the

negative impact on Plaintiffs’ periodic retirement benefits,

that impact is primarily the result of the actuarial assumptions

used by the Retirement Income Plan to calculate the offset,

assumptions which have not been challenged.

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16 ANDERSEN V. DHL RETIREMENT PENSION PLAN

A.

Before we proceed, we explain briefly our treatment of

the government’s amicus brief. Insofar as the government’s

brief interprets Regulation A–2, we defer to it. See Chase

Bank USA, N.A. v. McCoy, 131 S. Ct. 871, 880 (2011) (“[W]e

defer to an agency’s interpretation of its own regulation,

advanced in a legal brief, unless that interpretation is ‘plainly

erroneous or inconsistent with the regulation.’” (quotingAuer

v. Robbins, 519 U.S. 452, 461 (1997))). “[T]here is no reason

to believe that the interpretation advanced by the

[government] is a ‘post hoc rationalization’ taken as a

litigation position. The [United States] is not a party to this

case,” and it filed a brief only at our request. Id. at 881. 

“[T]here is,” therefore, “no reason to suspect that the position

the [government] takes in its amicus brief reflects anything

other than the agency’s fair and considered judgment as to

what the regulation required at the time this dispute arose.”

Id.

We do not, however, afford the same level of deference

to the government’s interpretation of the statutory anticutback rule or ERISA’s other provisions. Indeed, McCoy

acknowledged that the same level of “deference [i]s [not]

warranted to an agency interpretation of what [a]re, in fact,

Congress’ words.” Id. at 882. McCoy distinguished in this

regard Gonzales v. Oregon, 546 U.S. 243 (2006), where “the

regulation in question did ‘little more than restate the terms

of the statute’ pursuant to which the regulation was

promulgated.” Id. at 881–82 (quoting Gonzales, 546 U.S. at

257). Just as an agency’s litigating position is not entitled to

deference when the regulation it seeks to interpret does

“‘little more than restate the terms of the statute,’” id.

(quoting Gonzales, 546 U.S. at 257), the government’s brief

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 17

here is not entitled to deference pursuant to Chevron, U.S.A.,

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984), insofar as it interprets the statutory text directly. See

Alaska v. Fed. Subsistence Bd., 544 F.3d 1089, 1095 (9th Cir.

2008).

Nonetheless, the government’s position “is entitled to a

measure of deference proportional to its power to persuade,

in accordance with the principles set forth in Skidmore v.

Swift & Co., 323 U.S. 134 [] (1944).” Tablada v. Thomas,

533 F.3d 800, 806 (9th Cir. 2008). “Even where not binding,

. . . agency choices ‘certainly may influence courts facing

questions the agencies have already answered.’ In such an

instance, ‘[t]he fair measure of deference to an agency

administering its own statute has been understood to vary

with circumstances.’” Tualatin Valley Builders Supply, Inc.

v. United States, 522 F.3d 937, 941 (9th Cir. 2008) (quoting

United States v. Mead Corp., 533 U.S. 218, 228 (2001)). 

“[T]he weight given to the agency’s interpretation depends on

‘the degree of the agency’s care, its consistency, formality,

and relative expertness, and to the persuasiveness of the

agency’s position.’” Id. (quoting Mead, 533 U.S. at 228). 

For the reasons discussed below, we find the government’s

interpretation of the anti-cutback rule reasonable and

persuasive, and so give it some weight.

B.

DHL and the government contend that the elimination of

the transfer option did not violate the anti-cutback rule

because “in neither plan was the participant’s accrued benefit

reduced or eliminated.” To the degree that the anti-cutback

rule prohibits amendments that reduce “[t]he accrued benefit

of a participant under a plan,” 29 U.S.C. § 1054(g)(1)

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18 ANDERSEN V. DHL RETIREMENT PENSION PLAN

(emphasis added), if Plaintiffs’ complaint alleges no such

reduction, it fails as a matter of law in that respect.

ERISA defines “accrued benefit” as follows:

(A) in the case of a defined benefit plan, the

individual’s accrued benefit determined under

the plan and . . . expressed in the form of an

annual benefit commencing at normal

retirement age, or

(B) in the case of a [defined contribution] plan

. . . , the balance of the individual’s account.

29 U.S.C. § 1002(23).

Plaintiffs have not alleged that the elimination of the

transfer option reduced the balance of their Profit Sharing

Plan accounts. Accordingly, there has been no reduction of

Plaintiffs’ “accrued benefit” in the defined contribution plan.

With regard to the Retirement Income Plan — the defined

benefit plan to which DHL’s 2004 amendment directly

applies — the statutory definition of “accrued benefit” is not

as clear, providing only “(1) a tautological reference to the

individual’s accrued benefit; and (2) a somewhat more

enlightening reference to the plan.” Shaw v. Int’l Ass’n of

Machinists & Aerospace Workers Pension Plan, 750 F.2d

1458, 1463 (9th Cir. 1985). We therefore look to the

Retirement Income Plan document itself to determine what

“accrued benefit” means in the context of that plan.

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 19

We begin with section 4.01 of the Retirement Income

Plan, entitled “Accrued Benefit.”6It is contained within

Article IV of the plan, also entitled “Accrued Benefits.” 

Section 4.01 states that “[a] Participant who qualifies for

participation in the Plan shall earn an Accrued Benefit,

payable in the normal form of benefit at Normal Retirement

Age determined as follows . . . .” Paragraphs (A) and (B) of

that section initially describe the “formula” for calculating “a

Participant’s Accrued Benefit” as a multiple of the

participant’s years of service by a percentage of his average

monthly compensation. But those paragraphs specifically

note that the “Accrued Benefit” is to be calculated “[s]ubject

to the benefit offset under paragraph C of this Section 4.01.”

Paragraph (C) establishes the offset feature of the plan,

stating that “[a] Participant’s benefit determined under

paragraphs A and/or B above shall be reduced by the

Participant’s Profit Sharing Plan Annuity Benefit, if any, as

determined under this paragraph.” It then goes on to describe

how “a Participant’s Profit Sharing Plan Annuity Benefit” is

calculated. Section 4.01 was not altered by DHL’s 2004

amendment, and is not here challenged.

Section 4.01 does not mention the transfer option. The

transfer option is described, instead, in section 7.11 of the

Retirement Income Plan, a section entitled “Transferred

6 DHL filed copies of the Retirement Income Plan and Profit Sharing

Plan documents along with its appellate brief. Although these documents

were not attached to the complaint, they were incorporated by reference

therein, and were part of the record before the district court. Plaintiffs did

not object to the introduction of these documents below or on appeal. We

therefore consider them to the extent they are useful in resolving this case. 

See United States v. Ritchie, 342 F.3d 903, 908 (9thCir. 2003) (discussing

the doctrine of incorporation by reference in Rule 12(b)(6) cases).

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20 ANDERSEN V. DHL RETIREMENT PENSION PLAN

Profit Sharing Account.”7 Section 7.11 is contained within

Article VII, entitled “Payment of Benefits.” Section 7.11

alone was amended in 2004, by eliminating participants’ right

to transfer their Profit Sharing Account balances to the

Retirement Income Plan.

The anti-cutback rule prohibits any reduction of an

“accrued benefit.” 29 U.S.C. § 1054(g). If that term means,

in the context of DHL’s plan, benefits calculated in

accordance with the formula described in section 4.01, then

eliminating the transfer option did not reduce participants’

accrued benefit. The 2004 amendment did not change the

formula for calculating benefits in the Retirement Income

Plan — they are, and have always been, calculated on the

basis of a participant’s final average compensation and years

of service, with an offset for an attributed annuity amount

based on the participant’s account balance, if any, in the

Profit Sharing Plan. Furthermore, there is no textual support

for Plaintiffs’ contention that section 7.11’s transfer option

should be treated as part of a participant’s statutory “accrued

benefit.”

That the formula set forth in section 4.01 fully defines the

scope of what constitutes an “accrued benefit” under the

Retirement Income Plan is further evidenced by the language

and structure of that Plan as a whole, considered in light of

ERISA’s definition of an “accrued benefit.” ERISA defines

an “accrued benefit” as “the individual’s accrued benefit

determined under the plan and . . . expressed in the form of an

7 Section 7.11 provides that “[a] Participant may transfer his/her

nonforfeitable Employer Profit Sharing Plan account balance to this Plan

in order to be paid an annuity benefit from such transferred account

balance.”

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 21

annual benefit commencing at normal retirement age.” 

29 U.S.C. § 1002(23)(A) (emphasis added). Section 4.01

describes how “an Accrued Benefit, payable in the normal

form of benefit at Normal Retirement Age” is “determined,”

under the Retirement Income Plan. Such language indicates

that section 4.01 defines a participant’s “accrued benefit.” 

Moreover, the transfer option’s placement in Article VII,

concerning “Payment of Benefits,” rather than Article IV,

which covers “Accrued Benefits,” further demonstrates that

section 7.11 describes something other than an “accrued

benefit.”

Plaintiffs disagree, arguing that the term “accrued

benefit” is defined differently with regard to a floor-offset

plan like DHL’s. Plaintiffs cite a portion of an Internal

Revenue Service Revenue Ruling that discusses the

conditions a floor-offset plan must satisfy to meet the Internal

Revenue Code’s minimum vesting requirements. The Ruling

states that an “accrued benefit” in a floor-offset plan will

meet minimum vesting requirements only if:

(1) the accrued benefit under the defined

benefit plan determined without regard to the

offset derived from the profit-sharing plan

satisfies the [minimum vesting] requirements

. . . ; and (2) the offset to the benefit otherwise

payable is equal to the amount deemed

provided on the determination date by the

vested portion of the account balance in the

profit-sharing plan . . . .

Rev. Rul. 76-259, 1976-2 C.B. 111 (1976) (emphasis added). 

Plaintiffs rely on the italicized language to suggest that

DHL’s two plans should be treated as a “fully integrated

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22 ANDERSEN V. DHL RETIREMENT PENSION PLAN

arrangement,” and thus any amendment that affects the

combined take-home monthly benefits under the plans, as

DHL’s elimination of the transfer option did here, should be

treated as reducing an “accrued benefit” in violation of the

anti-cutback rule.

But the Revenue Ruling does not change the definition of

an “accrued benefit” established in 29 U.S.C. § 1002(23), or

the general notion that an accrued benefit for a floor-offset

plan is defined by reference to the terms of each of the two

plans at issue. Instead, it confirms that the “accrued benefit”

of a defined benefit plan is separate from the offset applied;

and it adds, for minimum vesting purposes, an independent

requirement regarding the offset — that it be equal to the

vested portion of the defined contribution plan — that

Plaintiffs do not contend has been violated here.

Further, 26 U.S.C. § 414(k), which Plaintiffs also cite,

states that for purposes of the provision defining “accrued

benefit,”8floor-offset plans are “treated as consisting of a

defined contribution plan to the extent benefits are based on

the separate account of a participant and as a defined benefit

plan with respect to the remaining portion of benefits under

the plan.” 26 U.S.C. § 414(k). With regard to DHL’s plans,

then, § 414(k) means that the “accrued benefit” of the offset

(which is “based on the separate account,” id.) is defined as

“the balance of the individual’s account,” and the “accrued

benefit” of the remainder is defined as “the individual’s

accrued benefit determined under the plan and . . . expressed

8 Section 414(k) cites 26 U.S.C. § 411(a)(7), the Internal Revenue Code

provision defining “accrued benefit.” The Internal Revenue Code

definition is substantively identical to the definition contained in ERISA,

29 U.S.C. § 1002(23), which we quote throughout this opinion.

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 23

in the form of an annual benefit commencing at normal

retirement age,” 29 U.S.C. § 1002(23). Neither of the

provisions Plaintiffs cite indicates that the transfer option

described in section 7.11 should be considered part of the

“accrued benefit” under the particular terms of DHL’s

defined benefit plan.

In sum, after the 2004 plan amendment, the “accrued

benefits” of both the defined contribution and the defined

benefit plans remained intact. We therefore conclude that the

reduction of periodic benefits paid from the Retirement

Income Plan that resulted from DHL’s elimination of the

transfer option did not violate 29 U.S.C. § 1054(g)(1). That

conclusion does not, however, entirely resolve this case.

C.

Even if no “accrued benefit” was otherwise reduced, the

2004 amendment eliminated the transfer option. The anticutback rule “treat[s] as reducing accrued benefits” any “plan

amendment which has the effect of . . . eliminating an

optional form of benefit.” 29 U.S.C. § 1054(g)(2). If the

transfer option was an “optional form of benefit,” as Plaintiffs

suggest, then eliminating it alone could be a “cutback” under

ERISA, regardless of the effect of that elimination on

participants’ other benefits under each of the two plans.

Whether Airborne’s transfer option was an “optional form

of benefit” has vexed the other courts to consider the

question, as well as the government. The district court in

Tasker expressly declined to “decide whether the right to

transfer benefits from one account to another . . . is an

optional form” because Regulation A–2 “alone requires

dismissal of [Tasker’s] claim, even if the transfer right is an

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24 ANDERSEN V. DHL RETIREMENT PENSION PLAN

optional form of benefit.” 2009 WL 4669936 at *4. The

First Circuit, by contrast, held the transfer right to be an

“ancillary benefit,” not an “optional form of benefit.” Tasker,

621 F.3d at 41–42. The district court in this case simply

failed to mention whether the transfer option was an “optional

form of benefit.” And the government asserts briefly, without

citation, that it was not.

A Treasury regulation defines an “optional form of

benefit” as

a distribution alternative . . . that is available

under the plan with respect to an accrued

benefit or . . . a retirement-type benefit. 

Different optional forms of benefit exist if a

distribution alternative is not payable on

substantially the same terms as another

distribution alternative. The relevant terms

include all terms affecting the value of the

optional form, such as the method of benefit

calculation and the actuarial factors or

assumptions used to determine the amount

distributed.

26 C.F.R. § 1.411(d)–3(g)(6)(ii)(A). A different Treasury

regulation addresses whether the “transfer of benefits

between and among defined benefit plans and defined

contribution plans (or similar transactions) violate[s] the

requirements of” the anti-cutback rule. Id. § 1.411(d)–4,

Q–3. That regulation states clearly that “[a] right to a transfer

of benefits from a plan pursuant to the elective transfer rules

of this paragraph (c) is an optional form of benefit under” the

anti-cutback rule. Id. at A–3(c)(2)(ii) (emphasis added); see

also id. at A–2(a)(2)(ii) (“[A]n elective transfer of an

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 25

otherwise distributable benefit is treated as the selection of an

optional form of benefit”).

With respect to the plans at issue, these regulations make

clear that a participant’s right to transfer his benefits “from”

the Profit Sharing Plan is an optional form of benefit. Id. at

A–3(c)(2)(ii) (emphasis added). But the 2004 amendment did

not modify the Profit Sharing Plan; that plan continues to

allow transfers to any eligible retirement plan that will accept

them. DHL amended only section 7.11 of the Retirement

Income Plan, stating that it “shall not accept transfers of any

Profit Sharing Plan account balances after December 31,

2004.” The 2004 amendment would thus constitute a cutback

only if the Retirement Income Plan’s acceptance of transfers

is a “distribution alternative,” i.e., an “optional form of

benefit.” 26 C.F.R. § 1.411(d)–3(g)(6)(ii)(A). Although the

government’s amicus brief seems to suggest it is not, it

provides no analysis meriting deference, and Plaintiffs

provide no answer to this question.9

9 The government also suggests in passing that because a different

statutory provision not mentioned in the parties’ briefing, 26 U.S.C.

§ 401(a)(31)(A), now requires defined contribution plans to allow

participants to transfer their balances to any “eligible retirement plan”

willing to accept transfers, id., a transfer option “no longer constitutes a

separate optional form of benefit if it is also provided for under broader

plan terms.” Regardless whether the government’s interpretation is

correct, it is irrelevant to this appeal. Section 401 requires defined

contribution plans to allowtransfers, but only to other defined contribution

plans. See 26 U.S.C. § 401(a)(31)(E) (defining “eligible retirement plan”

by reference to another statutory provision, except that “a qualified trust

shall be considered an eligible retirement plan only if it is a defined

contribution plan” (emphasis added)). Although a defined contribution

plan may by regulation allow transfers to defined benefit plans, see 26

C.F.R. § 1.401(a)(31)–1, the statute does not required it to do so. And

nothing in 26 U.S.C. § 401(a)(31) requires any plan to accept transfers. 

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26 ANDERSEN V. DHL RETIREMENT PENSION PLAN

We need not decide whether the Retirement Income

Plan’s acceptance of a transfer was an “optional form of

benefit” to resolve this appeal. If the transfer option was not

an “optional form of benefit,” then DHL could have

eliminated it without being considered to have reduced or

eliminated an “accrued benefit” in violation of the anticutback rule. And even if the transfer option was an

“optional form of benefit,” and was thus protected by the

anti-cutback rule, paragraph (2) of the anti-cutback statute

explicitly authorizes the Secretary to waive its application for

plan amendments eliminating an “optional form of benefit.” 

See 29 U.S.C. § 1054(g)(2) (“The Secretary of the Treasury

may by regulations provide that this subparagraph shall not

apply to a plan amendment described in subparagraph (B),”

concerning the elimination of “an optional form of benefit”). 

That is precisely what Regulation A–2 accomplishes. See 26

C.F.R. § 1.411(d)–4, Q& A–2(b)(2)(viii) (“A plan may be

amended to eliminate provisions permitting the transfer of

benefits between and among defined contribution plans and

defined benefit plans.”).

In short, this case fits squarely within the regulatory

exception for elimination of an “optional form of benefit,”

even if the transfer option was such a benefit. We therefore

agree with the district court that the 2004 amendment did not,

As the only change wrought by the 2004 amendment was the defined

benefit plan’s refusal to accept transfers from the defined contribution

plan, that amendment is not affected by § 401(a)(31).

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 27

as a matter of law, violate the anti-cutback rule. We affirm

the dismissal of Plaintiffs’ complaint.10

III.

Like the First Circuit, we are deeply troubled by this case. 

See Tasker, 621 F.3d at 43. The Plaintiffs “worked for many

years, planned for [their] retirement, and now find[] that the

annuity [they] can collect is[, for some,] roughly half the size

that [they] had anticipated.” Id. To the extent that ERISA’s

anti-cutback rule is designed to “protect[] employees’

justified expectations of receiving the benefits their

employers promise them,” it has failed to do so here. Heinz,

541 U.S. at 743.

We note that what we see as the real source of the

problem is referred to only obliquely in the briefs: the

differential actuarial assumptions used to calculate

participants’ benefits under the Retirement Income Plan and

the Profit Sharing Plan. Under the Profit Sharing Plan,

participants are entitled to take their account balances as a

lump sum payment or as an annuity. In calculating the

 

10 As we conclude that the complaint fails to state a claim, we need not

consider DHL’s alternative arguments that the complaint is time-barred

and that Plaintiffs’ breach of fiduciary duty claim is not cognizable under

29 U.S.C. § 1132(a)(3).

Nor need we decide whether the district court abused its discretion in

denying Plaintiffs’ motion for reconsideration. In that motion, Plaintiffs

sought to argue that, to the extent Regulation A–2 permitted DHL to

eliminate the transfer option and the result of that elimination was a

reduction in participants’ other “accrued benefit[s],” the Secretary

exceeded his statutory authority in promulgating Regulation A–2. We

have concluded that the elimination of the transfer right did not result in

a reduction of other “accrued benefit[s]” under the terms of either plan.

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28 ANDERSEN V. DHL RETIREMENT PENSION PLAN

annuity value, it appears that the Profit Sharing Plan uses one

set of actuarial assumptions about, e.g., a participant’s

lifespan, market conditions, etc. As Plaintiffs’ counsel

explained at oral argument, however, in calculating the

amount of offset, the Retirement Income Plan takes the same

Profit Sharing Plan account balance, and applies a different,

more favorable, set of actuarial assumptions, resulting in an

offset that is considerably higher than the annuity actually

payable from the aggregated defined contribution funds.11

For example, imagine Mr. Andersen retires with $350,000

in his Profit Sharing Plan account.12 The Profit Sharing Plan

will allow him to take his benefit as either a lump sum or a

monthly annuity, which the plan calculates as $3,000, using

one set of actuarial assumptions. But suppose Mr. Andersen

has also been guaranteed, under the terms of the Retirement

Income Plan, a defined monthly benefit of $5,000. Before

paying him the $5,000 benefit, the Retirement Income Plan

11 As we discuss above, supra n. 2, the language of the Retirement

Income Plan indicates that participants who chose to exercise the transfer

right received an additional benefit — beyond simply eliminating the

effect of the offset — because they were paid annuities from the

Retirement Income Plan calculated using that plan’s favorable actuarial

assumptions, but based on the value of their Profit Sharing Plan accounts. 

Although Plaintiffs did not mention this additional benefit in their briefs

or at oral argument, it appears to us that the significant reduction in

participants’ take-home periodic benefits after the 2004 amendment was

therefore caused by the combination of (1) participants’ inability to drop

their Profit Sharing Plan account balances to zero, thus eliminating the

effect of the offset; and (2) the fact that they would no longer receive with

their Profit Sharing Plan accounts an annuity calculated using the

assumptions of the Retirement Income Plan.

12 All numbers are entirely hypothetical, both in actual and relative

amounts.

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ANDERSEN V. DHL RETIREMENT PENSION PLAN 29

looks to Mr. Andersen’s account balance in the Profit Sharing

Plan to determine the amount of the offset. Using the same

$350,000 but applying more favorable actuarial assumptions,

the Retirement Income Plan calculates a monthly annuity of

$6,000 for Mr. Andersen. As a result, once offset, Mr.

Andersen receives no benefit from the Retirement Income

Plan.

Pursuant to the terms of the Retirement Income Plan, Mr.

Andersen is not entitled to a benefit because the “floor” —

the “guaranteed benefit level is established in the defined

benefit plan” — has been met by the “annuity value of the

defined contribution plan.” People Are Asking . . . What is a

floor-offset plan?. But in reality, all Mr. Andersen will get,

if he takes his Profit Sharing Plan benefit in annuity form, is

the $3,000 monthly annuity calculated by the Profit Sharing

Plan. The Retirement Income Plan is thus offsetting Mr.

Andersen’s guaranteed defined benefit by a hypothetical

annuity amount that will never in fact be available to him

under the terms of the Profit Sharing Plan.

Within this system, it is clear why most, if not all,

participants would have chosen to exercise the transfer option

prior to its elimination. It was far better for Mr. Andersen to

transfer the full amount of his Profit Sharing Plan account,

which would drop that balance to zero and eliminate the

effect of the offset. Were he to do that in the example we

provided, he would be entitled to (at least, see supra n. 2) the

full $5,000 guaranteed benefit from the Retirement Income

Plan instead of the $3,000 monthly annuity from the Profit

Sharing Plan. The only participant who would have chosen

not to exercise the transfer option would be one who had

amassed enough money in his Profit Sharing Plan account

that he would be entitled to a monthly annuity exceeding

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30 ANDERSEN V. DHL RETIREMENT PENSION PLAN

$5,000, even with the unfavorable actuarial assumptions. The

complaint alleges that Plaintiffs are not in that fortunate

situation.

Notwithstanding our concerns, Plaintiffs have not

challenged the differential actuarial assumptions used by the

two plans, and DHL’s 2004 amendment did not alter them. 

So what we see as the inequity occasioned by this procedure

is of no legal significance in this case.13 For the reasons

stated above, we must affirm the district court.

AFFIRMED.

13 It appears that the Secretary might be able to correct this problem,

should he choose to do so. A current Treasury regulation regarding flooroffset plans requires that “the accrued benefit . . . that would otherwise be

provided to an employee under the defined benefit plan must be reduced

solely by the actuarial equivalent of all or part of the employee’s account

balance attributable to employer contributions under a defined

contribution plan maintained by the same employer.” 26 C.F.R.

§ 1.401(a)(4)–8(d)(i) (emphasis added). Several regulations require

that “actuarial equivalence must be determined in a uniform manner

for all employees using reasonable actuarial assumptions.” Id.

§ 1.401(a)(4)–3(f)(5)(ii)(e)(7). Given that the Secretary already requires

that actuarial assumptions be “uniform” and “reasonable,” to the extent he

views the use of different, unrealistic actuarial assumptions to calculate

the offset in a floor-offset plan as undermining ERISA’s objectives, he

may have the regulatory discretion to put an end to the practice.

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