Stamper v. Total Petroleum, Inc. Retirement Plan

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
AUG 27 1999
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

PAUL H. STAMPER, et al.,

Plaintiffs-Appellants,
v.

TOTAL PETROLEUM, INC.
RETIREMENT PLAN FOR HOURLY
RATED EMPLOYEES WITH THE No. 98-3013
BARGAINING UNIT
REPRESENTED BY LOCAL 642 OF
THE INTERNATIONAL UNION OF
OPERATING ENGINEERS (AFL-
CIO), et al.,

Defendants-Appellees.

Appeal from the United States District Court
for the District of Kansas
(D.C. No. 96-1418-WEB)

Marc Rifkind (Thomas J. Hart, Slevin & Hart, Washington, D.C., and Charles
Schwartz, Blake & Uhlig, Kansas City, Kansas with him on briefs), Slevin &
Hart, Washington, D.C., for Plaintiffs-Appellants.

Jeffrey E. Goering (Lee Thompson with him on briefs), Triplett, Woolf &
Garretson, LLC, Wichita, Kansas, for Defendants-Appellees.

Before EBEL, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and
MURPHY, Circuit Judge.
EBEL, Circuit Judge.

Plaintiffs-appellants (“appellants”), former employees of Total Petroleum

(“Total”), sued Total, the pension plan it sponsored (“Plan”), and the Plan’s

fiduciaries (collectively “appellees”) under the Employee Retirement Insurance

Security Act of 1974 and its amendments (“ERISA”) on the ground that Total

unlawfully amended the Plan in a way that reduced the appellants’ “accrued

benefits.” The district court granted appellees’ motion for summary judgment and

dismissed appellant’s case. We now affirm.

BACKGROUND

The appellants are all former employees of Total at its facility in Arkansas

City, Kansas, who were terminated in 1996 when Total closed its Arkansas City

petroleum plant. At termination, appellants were all under the age of 55 years-old

and “fully vested” participants in Total’s Retirement Plan for Hourly-Rated

Employees within the bargaining units represented by Local 642 of the

International Union of Operating Engineers, AFL-CIO.

The Plan qualifies as an employee benefit plan under ERISA. See 29

U.S.C. § 1002(3). Total is the Plan sponsor within the meaning of 29 U.S.C. §

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1002(16)(B), and a fiduciary of the Plan within the meaning of 29 U.S.C. §

1002(21)(A). Total effectuated the original Plan on April 1, 1978 (“1978 Plan”).

Section 6.02 of the 1978 Plan stated: “In the event of termination 1 of

service of any participant for any reason other than his death or retirement under

the Plan, he shall be entitled, in lieu of any other benefits under the Plan, to his

vested percentage in a deferred pension as determined under the terms of Section

6.03, [depending on the employee’s age and years of service] . . . .” 1978 Plan §

6.02. Section 6.03 provides for a “deferred severance benefit” which is defined

as “the participant’s vested interest . . . in his ‘accrued retirement income’

determined at the date of his termination. The participant’s ‘accrued retirement

income’ shall consist of the amount of normal retirement income accrued for his

credited service as defined in Section 4.02 to the date of termination of his

service.” Id. § 6.03. Section 6.04 outlined the payment method for “deferred

severance benefits”:

[M]onthly installments . . . of one-twelfth of the annual amount
computed under Section 6.03 . . . shall commence on the first day of
the month next following the member’s attainment of his normal
retirement date [defined in Section 3.01 as the first day of the month
coincident with or next following the participant’s sixty-fifth
birthday]. Provided, however, any terminated participant may elect
to receive his retirement income commencing on the first day of any

1
The 1978 Plan states: “The service of any participant shall terminate
on . . . the date of his dismissal, resignation, release, discharge from the service
of the Company, or loss of seniority . . . .” 1978 Plan § 6.01.

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 month within the ten (10) year period immediately preceding his
normal retirement date, which retirement income shall be actuarially
reduced in accordance with the standard actuarial reduction tables
used by the actuary to take into account the participant’s younger age
and earlier commencement of payment of benefits.

Id. § 6.04 (emphasis added). The 1978 Plan did not contain the “standard

actuarial reduction tables” to be used nor did it explicitly state the actuarial

assumptions that would be used to reduce benefits for early claims.

Finally, the 1978 Plan provided that Total could “without the assent of any

other party hereto, amend this Plan at any time. Any such amendment shall be

made by a written instrument executed by the Company on the order of its Board

of Directors and shall become effective as of the date specified in such

instrument.” Id. § 13.01.

On November 15, 1996, Total amended the 1978 Plan retroactive to January

1, 1989 (“1996 Plan”). The 1996 Plan provided that a terminated employee

“whose termination occurs on or after completion of 5 Years of Service shall have

a fully nonforfeitable right to a Deferred Vested Benefit.” 2 1996 Plan § 4.06(a).

The 1996 Plan stated that “the Participant’s Deferred Vested Benefit shall be

equal to his Accrued Benefit computed as of the date of his termination of

employment.” Id. § 4.06(c). Under the 1996 Plan, “Deferred Vested Benefits”

2
For the purposes of interpreting the two plans at issue in this case, we
understand “deferred severance benefits” (as used in the 1978 Plan) to represent
the same benefits as “Deferred Vested Benefits” (as used in the 1996 Plan).

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were available to terminated employees who have completed at least five years of

service (as under the 1978 Plan); and, as under the 1978 Plan, such benefits were

to “commence as of the date that would have been [the employee’s] Normal

Retirement Date [defined in Section 4.02(b) as the first day of the month

coincident with or next following the employee’s attainment of age sixty-five].”

Id. § 4.06(b). Further, like the 1978 Plan, the 1996 Plan permitted terminated

employees to claim their “deferred vested benefits” any time in the ten years

immediately preceding normal retirement age (i.e., any time between age 55 and

age 65). See id. § 4.06(b). This provision is qualified as follows: “The

Participant’s Deferred Vested Benefit shall be reduced in accordance with the

Actuarial Equivalent reduction factors as described in Section 10.10 if payments

begin before what would have been the Participant’s Normal Retirement Date [the

first day of the month coincident with or next following the employee’s

attainment of age sixty-five].” Id. § 4.06(c). Thus, like the 1978 Plan, the

amended plan contemplated payout of severance benefits at age 65, but permitted

plan participants to elect to receive an actuarially reduced amount starting

anytime after attaining the age of 55. However, unlike the 1978 Plan, the 1996

Plan specified the actuarial assumptions to be used in reducing such benefits:

Section 10.10 Actuarial Assumptions. Except as otherwise
specifically required by law and provided herein, wherever the Plan calls
for the computation of a present value, an actuarially equivalent value, or
any other value requiring application of actuarial assumptions, an annual

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 5% rate of interest and the Basic UP-1984 Mortality Table set forward one
year shall be used . . . .

Id. § 10.10.

It is these actuarial reduction assumptions that make up the crux of

appellants’ suit. The former Total employees filed a complaint against appellees

in the United States District Court for the District of Kansas pursuant to 29

U.S.C. §§ 1132(a)(1)(B) and 1132(a)(3) alleging that the amendments to the 1978

Plan violate 29 U.S.C. § 1054(g), 26 U.S.C. § 411(d)(6), and 26 U.S.C. §

401(a)(25). Appellants argue that the 1978 Plan violated provisions of the

Internal Revenue Code (“Tax Code”) and ERISA that require pension plans to

specify actuarial assumptions to be used in reducing benefits, and that the 1996

amendments violate Tax Code and ERISA prohibitions against amending pension

plans in a way that reduces an accrued benefit. Appellants therefore claim that

the actuarial reduction factors in both plans should be stricken, and they should be

entitled, at any time after age 55, to the unreduced benefit they would be entitled

to at age 65.

The district court agreed with appellants that the 1978 Plan’s discretionary

actuarial reduction factors violated Tax Code and ERISA provisions, and that the

1996 amendments were likewise adopted in violation of the Tax Code and ERISA.

However, the district court concluded that Total could cure deficiencies in the

1978 Plan by employing “reasonable” actuarial assumptions to calculate deferred

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severance benefits for plan participants wishing to collect prior to age 65. After a

stipulation by the parties that “the actuarial assumptions specified in Section

10.10 of the [1996 Plan] are within the range of reasonable actuarial assumptions

for determining actuarial equivalence,” the district court granted summary

judgment for appellees. For different reasons we AFFIRM.

DISCUSSION

I. Whether appellants are entitled to unreduced retirement benefits at
age 55.

Because this case comes to us on appeal from the district court’s summary

judgment order our review is de novo. See Kaul v. Stephan, 83 F.3d 1208, 1212

(10th Cir. 1996). We examine the facts in the light most favorable to the

appellants, and will affirm the district court’s summary judgment order only if the

record demonstrates that there is no genuine issue as to any material fact. See id.

The appellants’ argument runs essentially as follows. First, they argue, the

1978 Plan’s vague statement that appellants’ “deferred severance benefits” would

be “actuarially reduced in accordance with the standard actuarial reduction tables

used by the actuary” if they elected to receive the benefits prior to reaching age

65 was unlawful under the Tax Code and ERISA, which both require that pension

plan payouts be definitely determinable from the plain terms of the plan. Second,

they continue, the amendments contained in the 1996 Plan, which cured the

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deficiency in the 1978 Plan by specifying the precise actuarial reduction figures

and methods to be used, were also unlawful in light of “anti-cutback” provisions

in the Tax Code and ERISA which make it impermissible to amend pension plans

in a way that reduces recipients’ accrued benefits. Thus, appellants contend that

the reduction factors in both plans are unlawful and must be stricken, entitling

them, at age 55, to the unreduced deferred severance benefit payments that both

plans contemplate paying out only after participants have reached age 65. 3 We

disagree and affirm the summary judgment order in favor of appellees.

We address first appellants’ claim that the 1978 Plan violated the Tax Code

and ERISA because it contained discretionary actuarial reduction references. As

noted above, the 1978 Plan provided that:

any terminated participant may elect to receive his retirement income
commencing on the first day of any month within the ten (10) year
period immediately preceding his normal retirement date, which
retirement income shall be actuarially reduced in accordance with the
standard actuarial reduction tables used by the actuary to take into
account the participant’s younger age and earlier commencement of
payment of benefits.

3
We note that this court has observed that providing an unreduced
retirement benefit prior to normal retirement age creates a windfall for the
beneficiary. See American Stores Co. v. American Stores Co. Retirement Plan,
928 F.2d 986, 990 (10th Cir. 1991) (“[A] failure actuarially to reduce an early
retirement benefit to reflect its earlier payment has the effect of increasing its
value so that it no longer reflects the retirement benefit calculated as of the
normal retirement age.”).

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1978 Plan § 6.04 (emphasis added). This provision was in effect until the

November 1996 amendments. Appellants argue that the discretion afforded in

this provision “violated both [Tax] Code Section 401(a)(25) as well as ERISA and

the [Tax] Code’s definitely determinable requirement.”

Title 26 U.S.C. § 401(a)(25) reads:

(25) Requirement that actuarial assumptions be specified.— A
defined benefit plan shall not be treated as providing definitely
determinable benefits unless, whenever the amount of any benefit is
to be determined on the basis of actuarial assumptions, such
assumptions are specified in the plan in a way which precludes
employer discretion.

26 U.S.C. § 401(a)(25). Appellants claim that the 1978 Plan did not specify the

actuarial assumptions to be used to calculate “deferred severance benefits”

claimed before age 65, and thus they are entitled to relief.

However, in this case we do not need to decide whether the 1978 Plan

violates the Tax Code provision of 26 U.S.C. § 401(a)(25) because in any event

we conclude that § 401(a)(25) does not provide ERISA relief for appellants.

As the Seventh Circuit said:

There is no basis, under . . . ERISA, to find that the provisions of
[26 U.S.C.] § 401—which relate solely to the criteria for tax
qualification under the Internal Revenue Code—are imposed on
pension plans by the substantive terms of ERISA. We are convinced
that had Congress intended that § 401 of the I.R.C. be applicable to
ERISA, it would have so stated in clear and unambiguous language
as it did in 29 U.S.C. § 1202(c) with §§ 410(a), 411 and 412 of the
I.R.C. We thus refuse to read § 401(a) of the I.R.C. as applicable to
ERISA.

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Reklau v. Merchants Nat’l Corp., 808 F.2d 628, 631 (7th Cir. 1986) (internal

citation, quotation, and footnote omitted); see also West v. Clarke Murphy, Jr.

Self Employed Pension Plan, 99 F.3d 166, 169 (4th Cir. 1996) (discussing Reklau

with approval and observing that § 401 of the Internal Revenue Code does not

modify ERISA).

Section 401(a)(25)’s requirement that actuarial assumptions be specified in

order to qualify a pension plan for tax exempt status arose out of a 1979 Revenue

Ruling made pursuant to 26 U.S.C. § 401. See 53 Fed. Reg. 26050, 26050-51

(1988). Revenue Ruling 79-90 stated that: “A defined benefit plan which

provides optional forms of retirement benefits which are, according to the

provisions of the plan, ‘actuarially equivalent’ to the normal benefit must specify

the actuarial assumptions used to compute the amounts of such optional benefits.”

Rev. Rul. 79-90, 1979-1 CB 155. As the district court observed, this Revenue

Ruling “was subsequently codified by the Retirement Equity Act (‘REA’) of 1984

in 26 U.S.C. § 401(a)(25).” However, while the REA incorporated a number of

requirements into both the Tax Code and ERISA, importantly, the REA

incorporated Revenue Ruling 79-90’s “actuarial assumptions” requirement only

into the Tax Code and not into ERISA. See Cooke v. Lynn Sand & Stone Co.,

673 F. Supp. 14, 21 n.8 (D. Mass. 1986) (“These provisions of Revenue Ruling

79-90 were incorporated into the Internal Revenue Code by the § 301(b) of the

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REA, 26 U.S.C. § 401(a)(25). However, they were not incorporated into

ERISA.”). By comparison, Revenue Ruling 81-12, which states that plan

amendments may not change actuarial assumptions in a way that would reduce a

participant’s accrued benefits, was incorporated by REA § 301(a)(1) and (2), into

the Tax Code (at 26 U.S.C. §§ 411 and 412) and ERISA (at 29 U.S.C. § 1054(g)).

In light of the Supreme Court’s observation that “ERISA is a comprehensive and

reticulated statute, which Congress adopted after careful study of private

retirement pension plans,” Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 510

(1981) (quotation and citation omitted), we believe it would be improper to read

into ERISA a requirement Congress elected to apply only to the Tax Code. 4

4
District courts considering the issue of whether 26 U.S.C. § 401(a)(25)
applies to ERISA and provides a cause of action for pension plan beneficiaries
have split on the question. Compare Kiefer v. Ceridian Corp., 976 F. Supp. 829,
833 (D. Minn. 1997) (“ERISA requires the plans to set forth the actuarial
assumptions used to compute lump-sum benefits, in order that the plan provides a
‘definitely determinable benefit’ which precludes employer discretion and change
without formal amendment.” (citing 29 U.S.C. § 1102(b)(4) and 26 U.S.C. §
401(a)(25))), with McDaniel v. Chevron Corp., No. C-96-2891-CAL, 1998 WL
355534, *4-*5 (N.D. Cal. June 30, 1998) (“The term ‘definitely determinable’
used in Kiefer originates from the tax qualification requirements of the Revenue
Code. Cases using that language specifically refer to tax qualification, and the
parties do not cite any case (except Kiefer) using that language in reference to the
ERISA statute . . . . This court concludes that (1) Revenue Code § 401(a)(25) is
not incorporated into ERISA; (2) ERISA does not require a statement of
‘definitely determinable benefits,’ (3) Revenue Code violations do not give rise to
substantive rights under ERISA, and (4) Revenue Code § 401(a)(25) does not
provide the standard for interpretation of [29 U.S.C. §1102(b)(4)]. They are
different statutes serving different purposes, each one setting forth its respective
(continued...)

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Accordingly, section 401(a)(25) cannot provide appellants with their requested

ERISA relief.

Appellants also contend that the 1978 Plan violated the Tax Code’s and

ERISA’s asserted requirement that pension plan benefits be “definitely

determinable.” Under Treasury Department regulations promulgated pursuant to

26 U.S.C. § 401(a), in order for a pension plan to qualify under the Tax Code, the

plan must provide for “the payment of definitely determinable benefits to . . .

employees over a period of years, usually for life, after retirement.” See 26

C.F.R. § 1.401-1(b)(1)(i). However, for the reasons stated above, the provisions

of 26 U.S.C. § 401(a) and the regulations promulgated under them cannot form

the basis of an ERISA action. Nevertheless, appellants argue that ERISA

contains an independent requirement which, read in light of Tax Code § 401 in

general, and § 401(a)(25) in particular, precludes employer discretion in setting

actuarial assumptions to be used in calculating pension plan benefits. Appellants

contend that ERISA’s requirement that “[e]very employee benefit plan shall . . .

specify the basis on which payments are made to and from the plan,” 29 U.S.C. §

1102(b)(4), obliges plans to provide “definitely determinable” benefits and

prohibits plans from employing discretionary actuarial assumptions. In essence,

4
(...continued)
requirements. The Plan here need only describe ‘the basis on which payments are
to be made.’” ).

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appellants ask us to write into ERISA what Congress wrote only into the Tax

Code (through §401(a)(25)) and what the Treasury Department wrote only into

regulations under the Tax Code (in 26 C.F.R. § 1.401-1(b)(1)(i)).

While we recognize the inconsistent treatment of this issue in the federal

courts, 5 we believe it would be imprudent to read into ERISA a requirement that

neither Congress nor the Treasury Department (nor the Department of Labor) saw

fit to make explicit. Neither the text of 29 U.S.C. § 1102(b)(4), nor any

regulation interpreting it, makes clear what it means to “specify the basis on

which payments are to be made to and from the plan.” However, juxtaposed

against the very explicit requirements of plan specificity contained in 26 U.S.C. §

401(a)(25) and 26 C.F.R. 1.401-1(b)(1)(i), the ERISA provision in 29 U.S.C. §

1102(b)(4) is best read to impose only a more general requirement that pension

5
Compare Dooley v. American Airlines, Inc., 797 F.2d 1447, 1452-53 (7th
Cir. 1986) (refusing to read “definitely determinable” requirement into 29 U.S.C.
§ 1102(b)(4)), and McDaniel, 1998 WL 355534, at *3-*5 (observing that “ERISA
§ 402(b)(4) is part of a larger, more general requirement scheme” than Tax Code
§ 401, thus 29 U.S.C. §1102(b)(4) imposes no requirement of “definitely
determinable” benefits), with Kiefer, 976 F. Supp. at 833 (“ERISA requires the
plans to set forth the actuarial assumptions used to compute lump-sum benefits, in
order that the plan provides a ‘definitely determinable benefit’ which precludes
employer discretion and change without formal amendment.” (citing, inter alia, 29
U.S.C. § 1102(b)(4))), and Czyz v. General Pension Bd., Bethlehem Steel Corp.,
578 F. Supp. 126, 129 (W.D. Pa.1983) (stating that ERISA § 402(b)(4)
requirement is fulfilled “if a plan specifies the basis upon which payments are to
be made, so as to satisfy the legislative purpose that each participant knows
exactly where he stands with respect to the plan.”).

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plans put beneficiaries on notice of the principles under which plan payouts are

determined.

Here, the 1978 Plan explicitly provided that “deferred severance benefits”

claimed before age 65 would be reduced according to “standard actuarial

reduction tables.” 1978 Plan § 6.04. While the Plan’s actuarial consultant testified

at his deposition that there exists no single set of factors to determine actuarial

equivalence, (“there is a variety of different assumptions that could be used to

calculate an early retirement actuarial equivalent benefit”), the 1978 Plan’s

reference to “standard actuarial reduction tables” was sufficiently clear to notify

plan participants of the basis on which payments were to be made to and from the

Plan. Thus, the Plan adequately set forth the principles that early retirement

benefits were (1) to be reduced to reflect the accelerated receipt of benefits and

(2) the reduction was to be in accordance with “standard actuarial reduction

tables.” Despite the “variety of assumptions” that could be used to calculate

actuarial value of the benefits at issue, here the world of possibilities is confined

by the Plan’s reference to “standard” actuarial reduction tables and the additional

requirement recognized by the district court that the actuarial reduction tables be

“reasonable” (a point to which appellants stipulated in this case).

Next, appellants argue that the November 1996 Plan amendments, which

made explicit the actuarial assumptions that would be used to reduce severance

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benefits claimed prior to normal retirement age, worked to reduce their accrued

benefits, and thus were adopted in violation of 29 U.S.C. § 1054(g) and 26 U.S.C.

§ 411(d)(6). However, appellants have failed to establish a genuine dispute of

fact on this point in this record.

That relevant portion of the ERISA subsection provides:

(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
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.

29 U.S.C. § 1054(g)(1)-(2). 6

6
Title 26 U.S.C. § 411(d)(6) imposes the same limitation in order for a
pension plan to qualify under the Tax Code:

(A) In general. — A plan shall be treated as not satisfying the
requirements of this section if the accrued benefit of a participant is
decreased by an amendment of the plan . . . .

(B) Treatment of certain plan amendments.—For purposes of
subparagraph (A), a plan amendment which has the effect of—

(i) eliminating or reducing an early retirement benefit or a
retirement-type subsidy (as defined in regulations), or
(continued...)

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 Appellees have not disputed that the “deferred vested benefit” at issue in

this case qualifies as “an early retirement benefit.” Thus, we now turn to the

question of whether the 1996 amendments to the 1978 Plan had the effect of

eliminating or reducing such benefits. Under Total’s 1978 Plan, terminated

employees were permitted to receive their full vested benefit at age 65 or an

amount “actuarially reduced in accordance with the standard actuarial reduction

tables used by the actuary” anytime after age 55. 1978 Plan § 6.04. The 1996

amendments specified the precise actuarial assumptions to be used in calculating

reductions for employees’ “deferred severance benefit” collected before age 65,

thereby eliminating any uncertainty contained in the 1978 Plan provisions.

Had the 1978 Plan provided an actuarial formula by which “deferred

severance benefits” were to be reduced for pre-age-65 claims, we could simply

compare the amount that that formula produced with the amount that the 1996

Plan’s actuarial reduction formula produced. If calculations under the latter plan

arrived at a figure lower than the former plan would have produced, we could rule

in appellants’ favor. However, because the 1978 Plan failed to provide the

6
(...continued)
(ii) eliminating an optional form of benefit,

with respect to benefits attributable to service before the amendment shall
be treated as reducing accrued benefits.

26 U.S.C. § 411(d)(6).

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precise methods and figures by which to calculate amounts for actuarially reduced

deferred severance benefits, no ready comparison of the amounts rendered by the

1978 and 1996 Plan formulae can be made, and the record does not show that the

1996 amendments reduce accrued benefits such that they violate 26 U.S.C. §

411(d)(6) and 29 U.S.C. § 1054(g).

In an effort to demonstrate that the actuarial assumptions employed under

the pre-amendment 1978 Plan would have offered higher benefits than the 1996

Plan actuarial reduction assumptions, appellants submitted nine letters in the

district court in support of their motion for summary judgment. Eight of these

letters say nothing more as to actuarial reduction than the generalities of the 1978

Plan: “You will have the option of filing for early retirement at or after age 55

but the monthly benefit amount will be actuarially reduced. The reduction

percentage is determined by your age (in years and months) at the time you file

for your benefit.” (See, e.g., Letter of 9/27/89 to Michael Atkins (Appellant App.

75).) Only one of the nine letters indicates any specifics as to the actuarial

reductions. That letter indicates that if the terminated employee claimed her early

retirement benefits at age 55, she would receive “40.59% of the full [age 65]

amount,” and if she claimed the benefits at age 60 she would receive “61.88% of

the benefit at age 65.” (See Letter of 12/21/88 to Marjorie E. Brickey (Appellant

App. 74).) These numbers are consistent with the actuarially reduced amounts

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calculated under the 1996 amendments, which appellants concede would be

approximately 40% of the full (age 65) benefit if claimed at age 55, and

approximately 60% of the full (age 65) benefit if claimed at age 60. Accordingly,

the appellants have failed to make a showing sufficient to defeat summary

judgment that the 1996 amendments would reduce an accrued benefit to which

they are entitled. Therefore, we cannot conclude that the appellants have made a

sufficient showing that the 1996 amendments violate 29 U.S.C. § 1054(g). 7

Appellants further claim that Treasury Regulations promulgated pursuant to

26 U.S.C. § 411(d)(6) established a deadline by which to eliminate discretionary

payout provisions, 8 which deadline passed no later than 1990. 9 Specifically,

7
As such, the Tenth Circuit cases appellants cite for support are inapposite.
Far from presenting “the very issue presented by this case,” as appellants claim,
Counts v. Kissack Water & Oil Serv., Inc., 986 F.2d 1322 (10th Cir. 1993),
involved an amendment to a pension plan that eliminated an optional form of
benefit, which this court held “by its very terms . . . violated the proscription of
29 U.S.C. § 1054(g)(2).” Id. at 1324. And, in Pratt v. Petroleum Prod.
Management, Inc. Employee Sav. Plan & Trust, 920 F.2d 651 (10th Cir. 1990),
we recognized a violation of 29 U.S.C. § 1054(g), where an amendment to a
pension plan would have resulted in an employee receiving a payout of $7,184.37
as opposed to the pre-amendment amount of $27,692.32. See id. at 652-53, 660-
61.
8
For the purposes of resolving this claim, we assume that the 1978 Plan’s
reference to reduction according to “standard actuarial reduction tables”
constitutes a discretionary provision.

Title 29 U.S.C. § 1202(c) makes these Treasury Regulations applicable to
9

29 U.S.C. § 1054(g):

(continued...)

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appellants claim that the timing of all amendments made in order to eliminate

discretionary benefits is governed by 26 C.F.R. § 1.411(d)-4, Q-8, which

provides:

(b) Transitional alternatives. If the availability of an optional forms
of benefit, early or late retirement benefit, or retirement-type subsidy
under an existing plan is conditioned on the exercise of employer
discretion, the plan must be amended either to eliminate the optional
form of benefit, early or late retirement benefit, or retirement-type
subsidy to make such benefit available to all participants without
limitation, or to apply objective and nondiscriminatory conditions to
the availability of the optional form of benefit, early or later
retirement benefit, or retirement-type subsidy. See paragraph (d) of
this Q&A-8 for rules limiting the period during which section
411(d)(6) protected benefits may be eliminated or reduced under this
paragraph.

26 C.F.R. § 1.411(d)-4, A-8(b). Subparagraph (d) of Q&A-8 reads:

(d) Limitation on transitional alternatives. The transitional
alternatives permitting the elimination or reduction of section
411(d)(6) protected benefits are only permissible until the applicable
effective date for the plan (see Q&A-9 of this section). After the
applicable effective date, any amendment . . . that eliminates or
reduces a section 411(d)(6) protected benefit or imposes new
objective conditions on the availability of such benefit will fail to
qualify for the exception to section 411(d)(6) provided in Q&A-8.
This is the case without regard to whether the section 411(d)(6)
protected benefit is subject to employer discretion.

9
(...continued)
Regulations prescribed by the Secretary of the Treasury under
section 410(a), 411, and 412 of Title 26 (relating to minimum
participation standards, minimum vesting standards, and minimum
funding standards, respectively) shall also apply to the minimum
participation, vesting, and funding standards set forth in parts 2 and 3
of subtitle B of subchapter I of this [ERISA] chapter.

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26 C.F.R. § 1.411(d)-4, A-8(d). 10 The transitional timing provisions of the

Treasury Regulation required that amendments to collectively bargained pension

plans that reduced or eliminated benefits be made by “the first day of the first

plan year commencing on or after January 1, 1989.” 26 C.F.R. § 1.411(d)-4, A-

9(c)(3). Accordingly, appellants argue that Total’s 1996 amendments were tardy

and unlawful.

“Having missed the deadline [to lawfully amend its Plan],” appellants

argue, Total “was forever precluded from later adopting and applying [actuarial

reduction factors] to existing participants.” This result, they claim, is compelled

by our decision in Counts. However, unlike the present challenged plan

amendment, Counts involved the question of whether an optional benefit could be

eliminated after the deadline to amend, which implicates the specific text of the

Treasury Regulation. Here, we have already stated that appellants have failed to

establish that calculating their “deferred severance benefits” according to the

1996 actuarial assumptions would reduce their benefits as compared to the

amount they would have received under the 1978 Plan actuarial reduction method.

10
We acknowledge some ambiguity in the phrase “imposes new objective
conditions on the availability of such benefits.” However, because this regulation
is promulgated under 26 U.S.C. § 411(d)(6), which deals specifically with the
reduction or elimination of benefits, we believe this phrase should be similarly
read. Because there is no showing that the 1996 amendment reduced or
eliminated benefits, we believe this regulation does not apply.

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Because the timing provisions of the Treasury Regulations apply only to

reductions and eliminations of benefits and appellants have failed to demonstrate

any such reduction or elimination, their argument based on the Treasury

Regulations must fail. 11

Thus, we conclude that appellants who elect to begin receiving their

severance benefits prior to reaching age 65 are entitled only to an actuarially

reduced benefit, and not the unreduced benefit appellants seek.

II. Should appellants’ “deferred vested benefit” be reduced according to
the Early Retirement provisions in the Summary Plan Document?

Appellants argue that if this court holds that appellants’ “deferred

severance benefits” are subject to reduction, they are entitled to reduction

according to the Early Retirement provisions of the Summary Plan Description

(“SPD”) of the 1978 Plan, which would provide them payments of 75% of their

age 65 benefit at age 55, and 100% of their age 65 benefit as early as age 60.

11
Moreover, even if we found that the Treasury Regulations technically
prohibited the 1996 amendments to the pension plan, we would not agree with
appellants that those amendments must be stricken such that appellants would be
entitled to their age 65 benefit unreduced for actuarial equivalence. Appellant,
even assuming that the 1996 amendments violated the Treasury Regulations, have
failed to assert any injury arising out of the tardiness of the of the amendments.
They do not claim to have relied on the 1978 provision to their detriment or to
have been injured in any other way by the continuing operation of the assumed
unlawful actuarial reduction provision of the 1978 Plan until after it was amended
in 1996.

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Appellants claim that “[a]ny reasonable person reading [the SPD] would

understand that the benefit they are entitled to, if they are terminated prior to age

55, would be reduced by the same percentages as the Early Retirement pension.”

We disagree.

Appellants point to the SPD provision that states: “If you resign or are

discharged from the service of the Company, you will receive a deferred vested

pension benefit equal to your vested interest as specified in the schedule below.”

The “schedule below” indicates that employees are 0% vested until they have

been employed for five years, and they are 100% vested after five years. This

provision says nothing about how that fully vested amount will be paid out.

Hence, we reject appellants’ strained argument that the payout would be

according to the Early Retirement reduction schedule.

While the SPD may be silent on the actuarial reduction assumptions of

“deferred severance benefits,” it in no way contradicts the Plan regarding these

benefits. As such, the Plan must control, and the Plan surely does not

contemplate using the same schedule for “deferred severance benefits” and “early

retirement benefits.” 12 Moreover, appellants make no claim that they actually

detrimentally relied on the SPD. They make only generalized claims that as a

12
Under the 1978 Plan, unlike the provisions for terminated employees, the
provision for “early retirement” pension provides an incentive to retire prior to
age 65.

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matter of course only SPDs, and not complete plans, are provided to pension plan

participants, and that reasonable people would have assumed that terminated

employees would be paid according to the early retirement benefit schedule.

These contentions cannot suffice to supplant the terms of the Plan. Chiles v.

Ceridian Corp., 95 F.3d 1505, 1519 (10th Cir. 1996) (“Where the SPD incorrectly

described benefits in the plan, to secure relief, [the claimant] must show some

significant reliance upon, or possible prejudice flowing from, the faulty plan

description.” (internal citations and quotations omitted)). Accordingly, we hold

that the actuarial assumptions set out in Section 10.10 of the 1996 Plan, rather

than the early retirement benefits schedule in the SPD, are to be used to calculate

the actuarial reductions to appellants’ “deferred severance benefits.”

CONCLUSION

We AFFIRM the district court’s grant of summary judgment.

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