Court Opinion

ID: 9499432
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:48:17.074204+00
Date Added: 2024-06-11T17:59:30.156596
License: Public Domain

On Petition for Rehearing
Feb. 7, 2007.
The Ameritech Plan’s. petition for rehearing and suggestion for rehearing en banc fastens on the following statement in our opinion: “the defendant argues that it was legally obligated to state its statutory obligations in the plan. But that is nonsense; section 12.1 [of the ERISA plan] did not even appear in earlier versions of the plan; nor does the section accurately state the defendant’s statutory obligations.” The Plan repeats the argument in its petition, citing for the first time a Treasury Regulation that does not, however, contain any such “manifestation” requirement. Treas. Reg. §§ 1.401-l(a)(l), (2). A plan must comply with the statute, of course; it does not have to recite the statute. And if the plan did have to recite the statute (as distinct from having to be amended to comply with a statutory requirement, Hamlin Development Co. v. Commissioner, 65 T.C.M. 2071, 1993 WL 69569, at *9 (T.C. 1993)), this could not help the petitioner, because section 12.1 does not track the statute. The petition argues that the section is materially identical to a provision of an IRS manual which suggests language for inclusion in ERISA plans. IRS, Defined Benefit Listing of Required Modification and Information (LRM) 120 (Feb. 2000), www.irs.gov/pub/ irs-utl/db_lrm.pdf. The provision was not cited in any of the briefs or mentioned at the oral argument. And for good reason. The provision is materially identical to the statute, not to section 12.1. Here is the provision:
No amendment to the plan (including a change in the actuarial basis for determining optional or early retirement benefits) shall be effective to the extent that it has the effect of decreasing a participant’s accrued benefit... .For purposes of this paragraph, a plan amendment that has the effect of (1) eliminating or reducing an early retirement benefit or a retirement-type subsidy, or (2) eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits.
And here is the statute (29 U.S.C. § 1054(g)):
(1) The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan....
(2) For purposes of paragraph (1), a plan amendment which has the effect of—
(A) eliminating or reducing an early retirement benefit or a retirement-type subsidy (as defined in regulations), or
(B) eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits. Cf. 29 U.S.C. § 411(d)(6). And here, for
good measure, once again, is section 12.1:
No amendment will reduce a Participant’s accrued benefit to less than the *824accrued benefit that he would have been entitled to receive if he had resigned [from Ameritech] on the day of the amendment... .and no amendment will eliminate an optional form of benefit with respect to a Participant or Beneficiary except as otherwise permitted by law and applicable regulations. [Emphasis added]
The phrase that we’ve italicized does not appear in the statute or in the IRS manual. So it can’t have been put there because of some (imaginary) rule that ERISA plans must recite specified language. (So the Plan is telling us in effect both that it complied with the rule and that it violated the rule!) The phrase implies, as we explained in our opinion, that the Plan reserved the right to eliminate optional benefits but not early-retirement benefits. Nothing in the petition for rehearing undermined that interpretation.
The petition for rehearing and suggestion for rehearing en banc is Denied.*

 Circuit Judges Joel M. Flaum, Kenneth F. Ripple, liana Diamond Rovner and Ann Claire Williams did not participate in the consideration of this matter.