Opinion ID: 2780763
Heading Depth: 2
Heading Rank: 2

Heading: Individual Accounts

Text: Deppenbrook next contends that the PBGC misinterpreted 29 U.S.C. § 1321 in failing to insure his individual account, instead forcing Deppenbrook to receive a lump sum distribution of his individual account balance and then offsetting his monthly pension payable under the PBGCadministered defined benefit portion of his plan by an equal amount. But he acknowledges, as he must, that ERISA’s coverage does not extend to an “individual account plan,” 29 U.S.C. § 1321(b)(1), or to a “defined benefit plan, to the extent that it is treated as an individual account plan,” id. § 1321(b)(12). The PBGC points to these provisions as support for its decision not to administer Deppenbrook’s individual account plan. Deppenbrook responds that the governing provision is 29 U.S.C. § 1321(c)(1), which states that “the term ‘individual account plan’ does not include a plan under which a fixed benefit is promised if the employer or his representative participated in the determination of that benefit.” According to Deppenbrook, then, the PBGC had to 15 insure his individual account because section 1321(c)(1) provides that it was not an individual account under ERISA. We are unpersuaded. An individual account plan is defined as “a pension plan which provides for an individual account for each participant and for benefits based solely upon the amount contributed to the participant’s account, and any income, expenses, gains and losses” attributed to the account. Id. § 1002(34). Deppenbrook’s pension-plan benefit included “a defined benefit pension determined in accordance with Article 5” of the pension plan, as well as an “Individual Account Benefit based on the balance of the Individual Account of the Participant.” JA 410. Each individual account was simply “an account maintained on behalf of a” plan participant. Id. at 411. As explained earlier, supra page 4, the PBGC is statutorily prohibited from insuring this account. Section 1321(c)(1) does not help Deppenbrook. That section provides that an individual account plan “does not include a plan under which a fixed benefit is promised if the employer or his representative participated in the determination of that benefit.” Deppenbrook’s individual account was not comprised of a fixed benefit determined by his employer. Instead, each individual account operated as a collection of funds that were invested but with no guarantee that a specified amount would be owed each employee once he retired. See JA 414 (“Upon any retirement or other termination of employment under Article 4 of the [pension] Plan, a Participant shall be eligible for a monthly pension benefit equal to that which can be provided by the vested value of his Individual Account.” (emphasis added)). Deppenbrook notes that, as a result of an earlier corporate merger, he had one pension plan—a defined benefit plan— 16 with an individual account component. He believes that the individual account was part of the overall defined benefit plan and that the PBGC was thus obligated to insure the entirety of the plan. The individual account, however, is explained in a separate appendix to the defined benefit plan. Deppenbrook does not point to any evidence that his individual account ever merged with his defined benefit account. Instead, it retained the essential features of an individual account throughout the course of his employment at RTI. Because the Congress wanted the PBGC to insure only those portions of a plan that promise a guaranteed benefit, both the text and purpose of ERISA make clear that the PBGC could not insure Deppenbrook’s individual account. The PBGC therefore properly interpreted ERISA and did not act arbitrarily or capriciously in failing to insure Deppenbrook’s individual account.