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Tina, Lawyer
Category: Employment Law
Satisfied Customers: 8184
Experience:  JD, BBA, recognized by ABA for excellence.
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I was in a DBPlan 1972, I remained in the same Plan till I

Customer Question

I was in a DBPlan 1972, I remained in the same Plan till I retired in 2000. My compensation
on 10/2/73, was $25,000/year, when I retired my compensation was $195,000/year. I've
been told I do not satisfy ERISA 2004(d)(2) subsection A, and I do not qualify for Protected
Benefits, and my annual benefit will be 415 limited, this is wrong. A. only applies to limit
100% compensation before 10/2/73, and does not apply to any retirements after 10/2/73,
only conditions of B need to be satisfied for all retirements after 10/2/73. A and C are both
to limit (earlier of)A 100% compensation, and (prior to)C accrued benefit. I satisfy the conditions of B, and should have my benefits protected from 415 limits.
What say you?
Submitted: 1 year ago.
Category: Employment Law
Expert:  socrateaser replied 1 year ago.


I'm pretty conversant with ERISA, and the law in general. However, I cannot find an ERISA Section 2004. Can you please provide a link to the relevant law or regulation? Thanks in advance!

Customer: replied 1 year ago.
ERISA section 2004(d)(2) is Transitional Rule for Defined Benefits Plans
IRM Transitional Rules and Protected Benefit
IRM ERISA Protected Benefits
Expert:  socrateaser replied 1 year ago.

Section 2004 was part of the transitional rules -- which are no longer reflected in the U.S. Code. I regret that this sort of research is beyond the scope of what I can possibly do in the Justanswer forum. I would have to bill by the hour for my time. If you're interested, I can send you an additional services offer. Otherwise, I'll have to reopen the question for others to try to assist you further.

Customer: replied 1 year ago.
ERISA 2004(d)(2) is still very relevant as is IRM My question: Is PBGC interpretation of subsection A
correct. PBGC says to satisfy the conditions of A ; "a participant's rate of compensation or annual benefit payable to that
person at retirement must be less than or equal to their rate of compensation as of 10/2/73 or you will not qualif to have
your benefits protected from 415 limits". This interpretation is an impossible condition to satisfy, the 415 limits do not
apply till 1/1/76, and common sense dictates that your compensation and benefits will be greater than they were on 10/2/73.
If you were to retire in 1974 or 1975, with compensation greater than 10/2/73, PBGC's interpretation can not apply to you
because the 415 limits do not apply till 1/1/76. Only the conditions of B need to be satisfied, as it states "for all retirements
after 10/2/73", and this would limit benefits in the years of 1974 and1975, and all subsequent years as well. PBGC's
interpretation of A makes the entire statute null and void. Why would Congress write a Law that no one can use?
Subsections A and C both limit retirement benefits before 10/2/73:
A limits benefit not to exceed 100% of compensation on the earlier of the date you retire or 10/2/73.
C limits benefit not to exceed your vested accrued benefit when you retire prior to 10/2/73.
B limits ALL retirements AFTER 10/2/73 to compensation and terms of the Plan. (terms of the Plan added 09-22-2014)
ERISA 2004(d)(2) works perfectly when applied as written, but when PBGC applies A to retirements after 10/2/73 that
interpretation becomes totally Arbitrary, Capricious and Contrary to the statute. No one, that was in a DB Plan before
10/2/73, will ever have their benefits and compensation, on retirement for any period after 10/2/73 be less than or equal to
what they were on 10/2/73; this is PBGC's interpretation to satisfy A for protected benefits under ERISA 2004(d)(2).
PBGC has never been challenged on this statute in the past, because the example they gave me of how they apply
the Transitional Rule is a pack of false information and deception.
Here is PBGC's example:
The transitional rule would allow a participant to keep the accrued benefit he had earned by 10/2/73, even if at the time he
retires his benefit exceeds the then-current 415(b) limit. For example, if a participant had accrued an annual benefit of
$85,000 under his plan by 10/2/73, and if he retired in 1976, when the 415(b) limit was $80,475, the plan would be able to
pay the $4,525 over the limit. Sounds good, but a big lie.1. He retired in 1976 (first year for 415 limits)
2. He accrued additional benefits in the rest of 1973, 1974, 1975 and 1976, let's say he retired 01/12/1976.
3. His accrued benefit on 01/12/1976, is now $95,000, (PBGC didn't mention this, because it doesn't fit their scheme).
4. His benefit of $95,000 now exceeds his $85,000 benefit on 10/2/73, thus he doesn't satisfy PBGC's interpretation
of subsection A and his benefits are not protected from 415 limits.
5. PBGC says,"the plan would be able to pay over the limit of $80,475", not true,his benefit is limited to 415 limit.
6. His accrued benefit at retirement, on 01/12/1976, is $95,000, with no protected benefits his annual benefit will be
reduced by $14,525, to the imposed ERISA 415 limit of $80,475, (not like PBGC's example, he did not keep his
accrued benefit he had earned by 10/2/73 or 01/12/1976). This is why PBGC's interpretation of ERISA 2004(d)(2)
Is so very wrong, they don't protect benefits, they reduce and deny earned benefits, contrary to statute.
7. PBGC's interpretation is so far out of the realm of reality, that they can not even give an example that will work.
The statute is written to protect benefits for those participants who were in DB Plans before ERISA imposed there
415 limits, PBGC has denied this protected benefit, and it must be corrected.Please give me your take on this matter
Thank you.
Expert:  socrateaser replied 1 year ago.

I'll reopen the question for others to assist. Best of luck with this very difficult legal issue.

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