Opinion ID: 679507
Heading Depth: 4
Heading Rank: 2

Heading: Irrevocability provision

Text: 39 Plaintiffs assert that the prior to language discussed above is inconsistent with the provision that Gulf's contributions to the A & B Plan be irrevocable. The Plan has contained the irrevocable language since its inception in 1944. 20 Chevron claims that the drafters of the Plan were merely parroting references in the tax law as it existed in 1944 when the Plan was created. While the 1939 Internal Revenue Code did not specifically use the term irrevocable, it decreed that a trust forming part of a pension plan would not be taxable under the Code 40 if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees under the trust, for any part of the corpus or income to be ... used for, or diverted to, purposes other than for the exclusive benefit of his employees. Internal Revenue Code, 53 Stat. Sec. 165(2) (1939). 41 The essence of this Code provision is that an employer may not revoke, or use for his own purposes, any part of corpus or income of the pension trust. Our reading of this provision, to require an employer's contributions to be irrevocable, is supported by the immediately succeeding section of the 1939 Code, which governs Revocable Trusts. 21 Thus, Gulf's use of the term irrevocable in the A & B Plan is not extraordinary, as plaintiffs contend, but merely a rephrasing of the then-current tax code provision governing pension trusts. 42 Furthermore, we agree with Chevron that revocation and reversion are not synonymous terms. 43 A power to revest or revoke may in economic fact be the equivalent of a reversion. But at least in the law of estates they are by no means synonymous. For, generally speaking, the power to revest or to revoke an existing estate is discretionary with the donor; a reversion is the residue left in the grantor on determination of a particular estate. Helvering v. Wood, 309 U.S. 344, 347, 60 S.Ct. 551, 553, 84 L.Ed. 796 (1940). 44 The full termination of the A & B Plan and the fulfillment of its purpose by payment of accrued benefits to participants do not constitute a revocation of the Plan or of any of Gulf's contributions to the Plan. When all liabilities are satisfied, the Plan may terminate, and surplus assets revert to Chevron, without causing a revocation of the Plan. 45 Because defendants, through the merger, have not caused a revocation of the A & B Plan, the irrevocable provision does not determine whether the Plan allowed employer reversion of surplus assets.