Opinion ID: 675256
Heading Depth: 2
Heading Rank: 1

Heading: From ERISA to 26 C.F.R. Sec. 1.411(d)-4

Text: 6 Congress enacted the Employee Retirement Income Security Act of 1974 (ERISA), Pub.L. No. 93-406, 88 Stat. 832 (codified as amended at 29 U.S.C.A. Secs. 1001-1461 (West 1985 & Supp.1994)),  'to promote the interests of employees and their beneficiaries in employee benefit plans' and 'to protect contractually defined benefits.'  Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989) (quoting Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 2896, 77 L.Ed.2d 490 (1983) and Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148, 105 S.Ct. 3085, 3093, 87 L.Ed.2d 96 (1985)). To further this purpose, Congress enacted the Retirement Equity Act of 1984 (REA), Pub.L. No. 98-397, 98 Stat. 1429. The REA amended section 204(g) of ERISA, 29 U.S.C. Sec. 1054(g), to read in relevant part: 7 (g) Decrease of accrued benefits through amendment of plan 8 (1) The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan.... 9 (2) For purposes of paragraph (1), a plan amendment which has the effect of-- 10 . . . . . 11 (B) Eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits.... 12 29 U.S.C.A. Sec. 1054(g) (West Supp.1994); see also I.R.C. Sec. 411(d)(6) (West Supp.1994) (essentially identical tax code provision). This provision, known as the anti-cutback rule, was intended to prevent employers from pulling the rug out from under employees participating in a plan. The payment of benefits in a lump sum is one example of a 29 U.S.C. Sec. 1054(g)(2)(B) optional form of benefits. Counts v. Kissack Water & Oil Serv., Inc., 986 F.2d 1322, 1324 (10th Cir.1993). 13 Interpreting this change to 29 U.S.C. Sec. 1054(g) and I.R.C. Sec. 411(d)(6), the Treasury Department in 1986 proposed 26 C.F.R. Sec. 1.411(d)-4 (1993). 2 As we noted earlier, this regulation, effective January 30, 1986, see Aldridge v. Lily-Tulip, Inc. Salary Retirement Plan Benefits Comm., 953 F.2d 587, 592 n. 4 (11th Cir.1992), prohibited employers or plan administrators from exercising discretion to deny or limit the availability of an optional form of benefit to a plan participant. 3 The regulation provided for a transition period with respect to existing plans, however, so long as a plan chose one of the transition alternatives prior to July 1, 1989. Otherwise, the regulation's requirements took full effect on that date. See 26 C.F.R. Sec. 1.411(d)-4, Q & A-9. 14