Opinion ID: 1023273
Heading Depth: 4
Heading Rank: 2

Heading: The PBGC as Statutory Trustee.

Text: As noted above, ERISA grants the PBGC authority to appoint a statutory trustee over a terminated plan. The PBGC may either apply to the appropriate district court for the appointment of the trustee or may (as happened here) consult with the plan administrator and agree upon a trustee. 29 U.S.C.A. § 1342(b)(3). Although the PBGC may request that it be appointed as trustee of a plan in any case, id. § 1342(b)(1), and in fact does so in the lion's share of cases, see LTV Corp., 496 U.S. at 637, 110 S.Ct. 2668, the statute does not mandate that the PBGC be appointed as trustee. See also Boivin v. U.S. Airways, Inc., 446 F.3d 148, 150 (D.C.Cir.2006) (noting that, although ERISA . . . does not require . . . the PBGC to be appointed as the successor trustee, [i]n practice, the PBGC has always applied to serve as successor trustee for distress-terminated defined-benefit plans); Pension Benefit Guar. Corp. v. Beverley, 404 F.3d 243, 249 (4th Cir.2005) (Although PBGC may request and often does request that it be appointed as statutory plan trustee . . ., a third party may also be appointed as statutory plan trustee.). ERISA grants the statutory trustee all the powers held by the plan administrator. 29 U.S.C.A. § 1342(d)(1)(A)(I). In addition, the trustee has the power to commence, prosecute, or defend on behalf of the plan any suit or proceeding involving the plan, 29 U.S.C.A. § 1342(d)(1)(B)(iv); collect . . . amounts due the plan, id. § 1342(d)(1)(B)(ii); pay benefits under the plan, id. § 1342(d)(1)(B)(I); liquidate the plan assets, id. § 1342(d)(1)(B)(vi); and limit payments of benefits under the plan to basic benefits or [ ] continue payment of some or all of the benefits which were being paid prior to his appointment, id. § 1342(d)(1)(A)(iv). Thus, for example, if the plan becomes fully funded at any point after plan termination, the statutory trustee may order that the plan continue to pay full benefits. If, after asset allocation, the plan is underfunded, the trustee may limit payments under the plan to basic benefits. In that case, and after the trustee has calculated the benefits due each participant, the PBGC calculates the amount of nonforfeitable benefits guaranteed by the PBGC and pays these guaranteed amounts to the trustee, who in turn pays them to each participant. 29 U.S.C.A. § 1322. The distinction between the PBGC's guarantor/trustee roles is particularly important with respect to the management of plan assets. As trustee, the PBGC must hold all plan assets, including assets recovered through litigation, in trust for the plan. See 29 U.S.C.A. § 1342(d)(1)(A)(ii). Although, as trustee, the PBGC may pool assets of terminated plans for the payment of benefits under any plan, see 29 U.S.C.A. § 1342(a), and is thus exempted from the fiduciary duty imposed on common-law trustees not to pool assets, the PBGC must still hold the pooled assets in trust for the terminated plans. [7] Thus, in its capacity as guarantor, the PBGC has no power over the assets of terminated plans. If a private trustee is appointed to administer a terminated plan, the private trustee, not the PBGC, holds and controls the plan's assets. See 29 U.S.C.A. § 1342(d)(1)(A)(iii) and (d)(1)(B)(vi). As noted above, if a plan becomes funded after termination, the statutory trustee (be it the PBGC or a private party) retains discretion to continue to pay full benefits under the plan. See 29 U.S.C.A. § 1342(d)(1)(A)(iv). But this is not the only way in which a plan can continue to pay full benefits. Just as the PBGC may terminate an insolvent plan, see 29 U.S.C.A. § 1342(a), it may undo the termination if it determines that the plan participants will be best served by plan restoration, see 29 U.S.C.A. § 1347 (West 1999). In such circumstances, the PBGC may order the statutory trustee to return all or part of the plan's assets to the plan administrator so that the plan may resume normal functioning. Id. Thus, ERISA does not give the PBGC in its capacity as guarantor any powers of plan administration. Rather, these powers are given to the trustee, which may or may not be the PBGC. As guarantor, then, the PBGC's function with respect to a terminated plan is limited to calculating the amount necessary to guarantee each participant's non-forfeitable benefits and paying that amount to the trustee.