Opinion ID: 675256
Heading Depth: 2
Heading Rank: 3

Heading: Retroactivity and 26 C.F.R. Sec. 1.411(d)-4

Text: 18 We agree with the Seventh and Tenth Circuits that a pension plan is a unilateral contract which creates a vested right in those employees who accept the offer it contains by continuing in employment for the requisite number of years. Hurd v. Illinois Bell Tel. Co., 234 F.2d 942, 946 (7th Cir.), cert. denied, 352 U.S. 918, 77 S.Ct. 216, 1 L.Ed.2d 124 (1956), quoted in Pratt v. Petroleum Prod. Management Employee Sav. Plan, 920 F.2d 651, 661 (10th Cir.1990); see Matthews v. Swift & Co., 465 F.2d 814, 817 (5th Cir.1972). 4 Thus, when a vested employee is terminated, a pension plan is ordinarily required to determine benefits in accordance with the plan then in effect. Pratt, 920 F.2d at 661; see Morales v. Plaxall, Inc., 541 F.Supp. 1387, 1391 (E.D.N.Y.1982); Denzer v. Purofied Down Prods. Corp. Profit-Sharing & Retirement Plan, 474 F.Supp. 773, 776-77 (S.D.N.Y.1979); but see Dyce v. Salaried Employees' Pension Plan of Allied Corp., 15 F.3d 163, 166 (11th Cir.1994) (permitting retroactive plan amendment that did not reduce or deprive beneficiaries of benefits to which they would otherwise be entitled). 19 In a similar fashion, we have been reluctant to apply statutes or regulations retroactively when such application would interfere with mature or vested rights. Wright v. Director, Fed. Emergency Management Agency, 913 F.2d 1566, 1573 (11th Cir.1990). As we noted in Wright, the Supreme Court explained in Bennett v. New Jersey that it 20 'has refused to apply an intervening change to a pending action where it has concluded that to do so would infringe upon or deprive a person of a right that had matured or become unconditional.' This limitation comports with another venerable rule of statutory interpretation, i.e., that statutes affecting substantive rights and liabilities are presumed to have only prospective effect. 21 470 U.S. 632, 639, 105 S.Ct. 1555, 1560 (1985) (citation omitted); Wright, 913 F.2d at 1573. Thus we found in Wright that where a regulatory change interferes with matured or vested rights ... a 'retrospective operation will not be given to a statute which interferes with antecedent rights ... unless such be the unequivocal and inflexible import of the terms, and the manifest intention of the legislature.'  Id. (quoting Greene v. United States, 376 U.S. 149, 160, 84 S.Ct. 615, 621-22, 11 L.Ed.2d 576 (1964)) (some internal quotation marks omitted). 22 Applying 26 C.F.R. Sec. 1.411(d)-4 retroactively to Williams's retirement benefits as fixed at the time of his termination in 1987 would seriously interfere with the right of the Committee to exercise discretion in considering Williams's request--a right the Committee clearly had at the time his employment terminated. We can find no intention on the part of the Treasury Department for such an effect. The regulation's provision for a transition period prior to full implementation of the regulation's provisions further underscores our conclusion that the Treasury Department did not intend for section 1.411(d)-4 to apply retroactively. See also De Nobel v. Vitro Corp., 885 F.2d 1180, 1194 n. 7 (4th Cir.1989) (noting in dictum that 26 C.F.R. Sec. 1.411(d)-4 not retroactive). 23 Because 26 C.F.R. Sec. 1.411(d)-4 does not have retroactive effect, it cannot apply to Williams's benefits as fixed at the time of his termination in 1987. This is so without regard to the time of the Committee's final decision on the matter. Thus, the Committee's exercise of discretion in denying Williams's claim for a lump sum benefit distribution was not prohibited.