BECK, liquidating trustee of ESTATES OF CROWN VANTAGE, INC., et al. v. PACE INTERNATIONAL UNION et al.

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
96 OCTOBER TERM, 2006
Syllabus
BECK, liquidating trustee of ESTATES OF CROWN
VANTAGE, INC., et al. v. PACE INTERNATIONAL
UNION et al.
certiorari to the united states court of appeals for
the ninth circuit
No. 05–1448. Argued April 24, 2007—Decided June 11, 2007
Respondent PACE International Union represented employees covered by
single-employer defined-benefit pension plans sponsored and adminis
tered by Crown, which had filed for bankruptcy. Crown rejected the
union’s proposal to terminate the plans by merging them with the
union’s own multiemployer plan, opting instead for a standard termina
tion through the purchase of annuities, which would allow Crown to
retain a $5 million reversion after satisfying its obligations to plan par
ticipants and beneficiaries. The union and respondent plan participants
(hereinafter, collectively, PACE) filed an adversary action in the Bank
ruptcy Court, alleging that Crown’s directors had breached their fidu
ciary duties under the Employee Retirement Income Security Act of
1974 (ERISA), 29 U. S. C. § 1001 et seq., by neglecting to give diligent
consideration to PACE’s merger proposal. The court ruled for PACE,
and petitioner bankruptcy trustee appealed to the District Court, which
affirmed in relevant part, as did the Ninth Circuit. The Ninth Circuit
acknowledged that the decision to terminate a pension plan is a business
decision not subject to ERISA’s fiduciary obligations, but reasoned that
the implementation of a termination decision is fiduciary in nature. It
then determined that merger was a permissible termination method and
that Crown therefore had a fiduciary obligation to consider PACE’s
merger proposal seriously, which it had failed to do.
Held: Crown did not breach its fiduciary obligations in failing to consider
PACE’s merger proposal because merger is not a permissible form of
plan termination under ERISA. Section 1341(b)(3)(A) provides: “In . . .
any final distribution of assets pursuant to . . . standard termination . . . ,
the plan administrator shall . . . (i) purchase irrevocable commitments
from an insurer to provide all benefit liabilities under the plan, or . . .
(ii) in accordance with the provisions of the plan and any applicable
regulations, otherwise fully provide all benefit liabilities under the
plan.” The parties agree that clause (i) refers to the purchase of annu
ities, and that clause (ii) allows for lump-sum distributions. These are
by far the most common distribution methods. To decide that merger

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
97 Cite as: 551 U. S. 96 (2007)
Syllabus
is also a permissible method, the Court would have to disagree with the
Pension Benefit Guaranty Corporation (PBGC), the entity administering
the federal insurance program that protects plan benefits, which takes
the position that § 1341(b)(3)(A) does not permit merger as a method of
termination because merger is an alternative to (rather than an exam
ple of) plan termination. The Court has traditionally deferred to the
PBGC when interpreting ERISA. Here, the Court believes that the
PBGC’s policy is based upon a construction of the statute that is permis
sible, and indeed the more plausible.
PACE argues that § 1341(b)(3)(A)(ii)’s residual provision referring to
an asset distribution that “otherwise fully provide[s] all benefit liabili
ties under the plan” covers merger because annuities (covered by
§ 1341(b)(3)(A)(i)) are an example of a permissible means of “provid[ing]
. . . benefit liabilities,” and merger is the legal equivalent of annuitiza
tion. Even assuming that PACE is right about the meaning of the word
“otherwise,” the clarity necessary to disregard the PBGC’s considered
views is lacking for three reasons. First, terminating a plan through
purchase of annuities formally severs ERISA’s applicability to plan
assets and employer obligations, whereas merging the Crown plans into
PACE’s multiemployer plan would result in the former plans’ assets re
maining within ERISA’s purview, where they could be used to satisfy
the benefit liabilities of the multiemployer plan’s other participants and
beneficiaries. Second, although ERISA expressly allows the employer
to (under certain circumstances) recoup surplus funds in a standard ter
mination, § 1344(d)(1), (3), as Crown sought to do here, merger would
preclude the receipt of such funds by reason of § 1103(c), which prohibits
employers from misappropriating plan assets for their own benefit.
Third, merger is nowhere mentioned in § 1341, but is instead dealt with
in an entirely different set of statutory sections setting forth entirely
different rules and procedures, §§ 1058, 1411, and 1412. PACE’s ar
gument that the procedural differences could be reconciled by requiring
a plan sponsor intending to use merger as a termination method to
follow the rules for both merger and termination is condemned by
the confusion it would engender and by the fact that it has no apparent
basis in ERISA. Even from a policy standpoint, the PBGC’s construc
tion of the statute is eminently reasonable because termination by
merger could have detrimental consequences for the participants and
beneficiaries of a single-employer plan, as well as for plan sponsors.
Pp. 101–111.
427 F. 3d 668, reversed and remanded.
Scalia, J., delivered the opinion for a unanimous Court.

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
98 BECK v. PACE INT’L UNION
Opinion of the Court
M. Miller Baker argued the cause for petitioner. With
him on the briefs were David E. Rogers, Wilber H. Boies,
and Michael T. Graham.
Matthew D. Roberts argued the cause for the United
States as amicus curiae urging reversal. With him on the
brief were Solicitor General Clement, Deputy Solicitor
General Kneedler, Jonathan L. Snare, Edward D. Sieger, Is
rael Goldowitz, and Karen L. Morris.
Julia Penny Clark argued the cause for respondents.
With her on the brief were Laurence Gold, Douglas L.
Greenfield, Leon Dayan, and Christian L. Raisner.*
Justice Scalia delivered the opinion of the Court.
We decide in this case whether an employer that sponsors
and administers a single-employer defined-benefit pension
plan has a fiduciary obligation under the Employee Retire
ment Income Security Act of 1974 (ERISA), 88 Stat. 829, as
amended, 29 U. S. C. § 1001 et seq., to consider a merger with
a multiemployer plan as a method of terminating the plan.
I
Crown Paper and its parent entity, Crown Vantage (the
two hereinafter referred to in the singular as Crown), em
ployed 2,600 persons in seven paper mills. PACE Inter
national Union, a respondent here, represented employees
covered by 17 of Crown’s defined-benefit pension plans. A
defined-benefit plan, “as its name implies, is one where the
employee, upon retirement, is entitled to a fixed periodic
payment.” Commissioner v. Keystone Consol. Industries,
Inc., 508 U. S. 152, 154 (1993). In such a plan, the employer
generally shoulders the investment risk. It is the employer
who must make up for any deficits, but also the employer
*A brief of amici curiae urging reversal was filed for the Chamber of
Commerce of the United States of America et al. by W. Stephen Cannon,
Raymond C. Fay, Laura C. Fentonmiller, James J. Keightley, Harold J.
Ashner, and Shane Brennan.

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
99 Cite as: 551 U. S. 96 (2007)
Opinion of the Court
who enjoys the fruits (whether in the form of lower plan
contributions or sometimes a reversion of assets) if plan
investments perform beyond expectations. See Hughes
Aircraft Co. v. Jacobson, 525 U. S. 432, 439–440 (1999). In
this case, Crown served as both plan sponsor and plan
administrator.
In March 2000, Crown filed for bankruptcy and proceeded
to liquidate its assets. ERISA allows employers to termi
nate their pension plans voluntarily, see Pension Benefit
Guaranty Corporation v. LTV Corp., 496 U. S. 633, 638
(1990), and in the summer of 2001, Crown began to consider
a “standard termination,” a condition of which is that the
terminated plans have sufficient assets to cover benefit
liabilities. § 1341(b)(1)(D); id., at 638–639. Crown focused
in particular on the possibility of a standard termination
through purchase of annuities, one statutorily specified
method of plan termination. See § 1341(b)(3)(A)(i). PACE,
however, had ideas of its own. It interjected itself into
Crown’s termination discussions and proposed that, rather
than buy annuities, Crown instead merge the plans cover
ing PACE union members with the PACE Industrial Union
Management Pension Fund (PIUMPF), a multiemployer or
“Taft-Hartley” plan. See § 1002(37). Under the terms of
the PACE-proposed agreement, Crown would be required to
convey all plan assets to PIUMPF; PIUMPF would assume
all plan liabilities.
Crown took PACE’s merger offer under advisement. As
it reviewed annuitization bids, however, it discovered that it
had overfunded certain of its pension plans, so that purchas
ing annuities would allow it to retain a projected $5 million
reversion for its creditors after satisfying its obligations to
plan participants and beneficiaries. See § 1344(d)(1) (provid
ing for reversion upon plan termination where certain condi
tions are met). Under PACE’s merger proposal, by con
trast, the $5 million would go to PIUMPF. What is more,
the Pension Benefit Guaranty Corporation (PBGC), which

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
100 BECK v. PACE INT’L UNION
Opinion of the Court
administers an insurance program to protect plan benefits,
agreed to withdraw the proofs of claim it had filed against
Crown in the bankruptcy proceedings if Crown went ahead
with an annuity purchase. Crown had evidently heard
enough. It consolidated 12 of its pension plans1 into a single
plan, and terminated that plan through the purchase of an
$84 million annuity. That annuity fully satisfied Crown’s ob
ligations to plan participants and beneficiaries and allowed
Crown to reap the $5 million reversion in surplus funds.
PACE and two plan participants, also respondents here
(we will refer to all respondents collectively as PACE), there
after filed an adversary action against Crown in the Bank
ruptcy Court, alleging that Crown’s directors had breached
their fiduciary duties under ERISA by neglecting to give
diligent consideration to PACE’s merger proposal. The
Bankruptcy Court sided with PACE. It found that the deci
sion whether to purchase annuities or merge with PIUMPF
was a fiduciary decision, and that Crown had breached its
fiduciary obligations by giving insufficient study to the
PIUMPF proposal. Rather than ordering Crown to cancel
its annuity (which would have resulted in a substantial pen
alty payable to Crown’s annuity provider), the Bankruptcy
Court instead issued a preliminary injunction preventing
Crown from obtaining the $5 million reversion. It subse
quently approved a distribution of that reversion for the ben
efit of plan participants and beneficiaries, which distribution
was stayed pending appeal.2
1 Crown’s various other pension plans are not at issue in this case.
2 PACE now suggests that it would have been willing to agree to a
merger in which Crown kept its surplus funds. Brief for Respondents 17,
n. 7. But this is belied not only by the terms of the proposed merger
agreement, but by the fact that PACE actively sought and obtained a
preliminary injunction freezing Crown’s $5 million reversion. The Bank
ruptcy Court having rejected PACE’s request to undo the annuity con
tract, PACE has provided no reason for pursuing this litigation other than
to obtain the $5 million that remained after Crown satisfied its benefit
commitments. Moreover, as PACE concedes, whether the parties would

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
101 Cite as: 551 U. S. 96 (2007)
Opinion of the Court
Petitioner, the trustee of the Crown bankruptcy estates,
appealed the Bankruptcy-Court decision to the District
Court, which affirmed in relevant part, as did the Court of
Appeals for the Ninth Circuit. The Ninth Circuit acknowl
edged that “the decision to terminate a pension plan is a
business decision not subject to ERISA’s fiduciary obliga
tions,” but reasoned that “the implementation of a decision
to terminate” is fiduciary in nature. 427 F. 3d 668, 673
(2005). It then determined that merger was a permissible
means of plan termination and that Crown therefore had a
fiduciary obligation to consider PACE’s merger proposal seri
ously, which it had failed to do. Petitioner thereafter sought
rehearing in the Court of Appeals, this time with the support
of the PBGC and the Department of Labor, who agreed with
petitioner that the Ninth Circuit’s judgment was in error.
The Ninth Circuit held to its original decision, and we
granted certiorari. 549 U. S. 1177 (2007).
II
Crown’s operation of its defined-benefit pension plans
placed it in dual roles as plan sponsor and plan administrator;
an employer’s fiduciary duties under ERISA are implicated
only when it acts in the latter capacity. Which hat the em
ployer is proverbially wearing depends upon the nature of
the function performed, see Hughes Aircraft Co., supra, at
444, and is an inquiry that is aided by the common law of
trusts which serves as ERISA’s backdrop, see Pegram v.
Herdrich, 530 U. S. 211, 224 (2000); Lockheed Corp. v. Spink,
517 U. S. 882, 890 (1996).
It is well established in this Court’s cases that an employ
er’s decision whether to terminate an ERISA plan is a settlor
function immune from ERISA’s fiduciary obligations. See,
e. g., ibid.; Curtiss-Wright Corp. v. Schoonejongen, 514 U. S.
73, 78 (1995). And because “decision[s] regarding the form
have agreed to a merger arrangement that did not include the $5 million
is “speculation.” Tr. of Oral Arg. 42.

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
102 BECK v. PACE INT’L UNION
Opinion of the Court
or structure” of a plan are generally settlor functions,
Hughes Aircraft Co., 525 U. S., at 444, PACE acknowledges
that the decision to merge plans is “normally [a] plan sponsor
decisio[n]” as well. Brief for Respondents 13–14, n. 5, 20–21;
see also Malia v. General Electric Co., 23 F. 3d 828, 833 (CA3
1994) (holding that employer’s decision to merge plans “d[id]
not invoke the fiduciary duty provisions of ERISA”). But
PACE says that its proposed merger was different, because
the PIUMPF merger represented a method of terminating
the Crown plans. And just as ERISA imposed on Crown a
fiduciary obligation in its selection of an appropriate annuity
provider when terminating through annuities, see 29 CFR
§§ 2509.95–1, 4041.28(c)(3) (2006), so too, PACE argues, did it
require Crown to consider merger.
The idea that the decision whether to merge could switch
from a settlor to a fiduciary function depending upon the con
text in which the merger proposal is raised is an odd one.
But once it is realized that a merger is simply a transfer of
assets and liabilities, PACE’s argument becomes somewhat
more plausible: The purchase of an annuity is akin to a trans
fer of assets and liabilities (to an insurance company), and if
Crown was subject to fiduciary duties in selecting an annuity
provider, why could it automatically disregard PIUMPF sim
ply because PIUMPF happened to be a multiemployer plan
rather than an insurer? There is, however, an antecedent
question. In order to affirm the judgment below, we would
have to conclude (as the Ninth Circuit did) that merger is, in
the first place, a permissible form of plan termination under
ERISA. That requires us to delve into the statute’s provi
sions for plan termination.
ERISA sets forth the exclusive procedures for the
standard termination of single-employer pension plans.
§ 1341(a)(1); Hughes Aircraft Co., supra, at 446. Those pro
cedures are exhaustive, setting detailed rules for, inter alia,
notice by the plan to affected parties, § 1341(a)(2), review by
the PBGC, § 1341(b)(2)(A), (C), and final distribution of plan

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
103 Cite as: 551 U. S. 96 (2007)
Opinion of the Court
funds, § 1341(b)(2)(D), § 1344. See generally E. Veal & E.
Mackiewicz, Pension Plan Terminations 43–61 (2d ed. 1998)
(hereinafter Veal & Mackiewicz). At issue in this case is
§ 1341(b)(3)(A), the provision of ERISA setting forth the per
missible methods of terminating a single-employer plan and
distributing plan assets to participants and beneficiaries.
Section 1341(b)(3)(A) provides as follows:
“In connection with any final distribution of assets
pursuant to the standard termination of the plan under
this subsection, the plan administrator shall distribute
the assets in accordance with section 1344 of this title.
In distributing such assets, the plan administrator
shall—
“(i) purchase irrevocable commitments from an in
surer to provide all benefit liabilities under the plan, or
“(ii) in accordance with the provisions of the plan and
any applicable regulations, otherwise fully provide all
benefit liabilities under the plan. . . . ”
The PBGC’s regulations impose in substance the same re
quirements. See 29 CFR § 4041.28(c)(1). Title 29 U. S. C.
§ 1344, which is referred to in § 1341(b)(3)(A), sets forth a
specific order of priority for asset distribution, including
(under certain circumstances) reversions of excess funds to
the plan sponsor, see § 1344(d)(1).
The parties to this case all agree that § 1341(b)(3)(A)(i) re
fers to the purchase of annuities, see 29 CFR § 4001.2 (defin
ing “irrevocable commitment”), and that § 1341(b)(3)(A)(ii)
allows for lump-sum distributions at present discounted
value (including rollovers into individual retirement ac
counts). As PACE concedes, purchase of annuity contracts
and lump-sum payments are “by far the most common distri
bution methods.” Brief for Respondents 45; see also Veal &
Mackiewicz 72–73 (“The basic alternatives are the purchase
of annuity contracts or some form of lump-sum cashout”).
To affirm the Ninth Circuit, we would have to decide that

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
104 BECK v. PACE INT’L UNION
Opinion of the Court
merger is a permissible method as well.3 And we would
have to do that over the objection of the PBGC, which
( joined by the Department of Labor) disagrees with the
Ninth Circuit, taking the position that § 1341(b)(3)(A) does
not permit merger as a method of termination because (in
its view) merger is an alternative to (rather than an example
of) plan termination. See Brief for United States as Ami
cus Curiae 8, 17–30. We have traditionally deferred to the
PBGC when interpreting ERISA, for “to attempt to answer
these questions without the views of the agencies respon
sible for enforcing ERISA, would be to embar[k] upon a
voyage without a compass.” Mead Corp. v. Tilley, 490 U. S.
714, 722, 725–726 (1989) (internal quotation marks omitted);
see also LTV Corp., 496 U. S., at 648, 651. In reviewing
the judgment below, we thus must examine “whether the
PBGC’s policy is based upon a permissible construction of
the statute.” Id., at 648.4
3 We would not have to decide that question of statutory interpretation
if Crown’s pension plans disallowed merger. Any method of termination
permitted by § 1341(b)(3)(A)(ii) must also be one that is “in accordance
with the provisions of the plan.” Crown thus could have drafted its plan
documents to limit the available methods of termination, so that merger
was not permitted. Petitioner argued below that Crown had done just
that. Though the District Court concluded that the plan terms allowed
for merger, App. to Pet. for Cert. 47, the Ninth Circuit declined to consider
the plan language because it held that petitioner had failed to preserve
the argument in the Bankruptcy Court. Petitioner did not seek certiorari
on the factbound issues of waiver and plan interpretation, and we accord
ingly do not address them here.
4 PACE argues that the PBGC took an inconsistent approach in several
opinion letters from the 1980’s concerning the applicability of certain joint
guidelines for asset reversions during complex termination transactions.
See App. to Brief in Opposition 6a–9a (Opinion Letter 85–11 (May 14,
1985)); id., at 10a–13a (Opinion Letter 85–21 (Aug. 26, 1985)); id., at 14a–
16a (Opinion Letter 85–25 (Oct. 11, 1985)). But insofar as the PBGC’s
consistency is even relevant to whether we should accord deference to its
presently held views, none of those letters so much as hints that the PBGC
treated merger as a permissible form of plan termination. In fact, to
the extent they even speak to the question, they clearly show the oppo

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
105 Cite as: 551 U. S. 96 (2007)
Opinion of the Court
We believe it is. PACE has “failed to persuade us that
the PBGC’s views are unreasonable,” Mead Corp., supra, at
725. At the outset, it must be acknowledged that the stat
ute, with its general residual clause in § 1341(b)(3)(A)(ii), is
potentially more embracing of alternative methods of plan
termination (whatever they may be) than longstanding
ERISA practice, which appears to have employed almost ex
clusively annuities and lump-sum payments. But we think
that the statutory text need not be read to include mergers,
and indeed that the PBGC offers the better reading in ex
cluding them. Most obviously, Congress nowhere expressly
provided for merger as a permissible means of termination.
Merger is not mentioned in § 1341(b)(3)(A), much less in any
of § 1341’s many subsections. Indeed, merger is expressly
provided for in an entirely separate set of statutory sections
(of which more in a moment, see infra, at 108–110). PACE
nevertheless maintains that merger is clearly covered under
§ 1341(b)(3)(A)(ii)’s residual clause, which refers to a distribu
tion of assets that “otherwise fully provide[s] all benefit lia
bilities under the plan.” By PACE’s reasoning, annuities
are covered under § 1341(b)(3)(A)(i); annuities are—by virtue
of the word “otherwise”—an example of a means by which a
plan may “fully provide all benefit liabilities under the plan,”
§ 1341(b)(3)(A)(ii); and therefore, “at the least,” any method
of termination that is the “legal equivalent” of annuitization
is permitted, Brief for Respondents 23. Merger, PACE ar
gues, is such a legal equivalent.
We do not find the statute so clear. Even assuming that
PACE is right about “otherwise”—that the word indicates
site. In Opinion Letter 85–25, for example, the PBGC explained that the
joint guidelines for asset reversions did not apply to “a transfer [of assets
and liabilities] from a single-employer plan to an ongoing multiemployer
plan followed by the termination of the single-employer plan.” Id., at 15a
(emphasis added). By characterizing the proposed transaction as one that
took place in two separate steps (merger and then termination), this letter
fully contemplated that merger was not an example of plan termination.

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
106 BECK v. PACE INT’L UNION
Opinion of the Court
that annuities are one example of satisfying the residual
clause in § 1341(b)(3)(A)(ii)—we still do not find mergers cov
ered with the clarity necessary to disregard the PBGC’s con
sidered views. Surely the phrase “otherwise fully provide
all benefit liabilities under the plan” is not without some
teeth. And we think it would be reasonable for the PBGC
to determine both that merger is not like the purchase of
annuities in its ability to “fully provide all benefit liabilities
under the plan,” and that the statute’s distinct treatment of
merger and termination provides clear evidence that one is
not an example of the other. Three points strike us as espe
cially persuasive in these regards.
First, terminating a plan through purchase of annuities
(like terminating through distribution of lump-sum pay
ments) formally severs the applicability of ERISA to plan
assets and employer obligations. Upon purchasing annu
ities, the employer is no longer subject to ERISA’s multitudi
nous requirements, such as (to name just one) payment of
insurance premiums to the PBGC, § 1307(a). And the PBGC
is likewise no longer liable for the deficiency in the event
that the plan becomes insolvent; there are no more benefits
for it to guarantee. The assets of the plan are wholly re
moved from the ERISA system, and plan participants and
beneficiaries must rely primarily (if not exclusively) on state
contract remedies if they do not receive proper payments or
are otherwise denied access to their funds. Further, from
the standpoint of the participants and beneficiaries, the risk
associated with an annuity relates solely to the solvency
of an insurance company, and not the performance of the
merged plan’s investments.
Merger is fundamentally different: It represents a contin
uation rather than a cessation of the ERISA regime. If
Crown were to have merged its pension plans into PIUMPF,
the plan assets would have been combined with the assets of
the multiemployer plan, where they could then be used to
satisfy the benefit liabilities of participants and beneficiaries

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
107 Cite as: 551 U. S. 96 (2007)
Opinion of the Court
other than those from the original Crown plans. Those
assets would remain within ERISA’s purview, the PBGC
would maintain responsibility for them, and if Crown contin
ued to employ the plan participants it too would remain sub
ject to ERISA. Finally, plan participants and beneficiaries
would have their recourse not through state contract law,
but through the ERISA system, just as they had prior to
merger.
Second, in a standard termination ERISA allows the em
ployer to (under certain circumstances) recoup surplus funds,
§ 1344(d)(1), (3), as Crown sought to do here. But ERISA
forbids employers to obtain a reversion in the absence of a
termination: “A valid plan termination is a prerequisite to a
reversion of surplus plan assets to an employer.” App. to
Brief in Opposition 15a (PBGC Opinion Letter 85–25 (Oct.
11, 1985)); see also Veal & Mackiewicz 164–165. Crown
could not simply extract the $5 million surplus from its plans,
nor could it have done so once those assets had transferred
to PIUMPF. This would have run up against ERISA’s
anti-inurement provision, which prohibits employers from
misappropriating plan assets for their own benefit. See
§ 1103(c). Consequently, we think the PBGC was entirely
reasonable in declining to recognize as a form of termination
a mechanism that would preclude the receipt of surplus
funds, which is specifically authorized upon termination.5
5 This inability to recover surplus funds through a merger could not be
remedied, as PACE now suggests, by structuring the transaction so that
Crown provided to PIUMPF only assets sufficient to cover plan liabilities
(effectively creating a spinoff from Crown’s plans and merging that spinoff
plan with PIUMPF). Under that arrangement, Crown could indeed ob
tain the $5 million reversion—not, however, by reason of the merger
called-termination, but only by subsequent termination of the residual
plan. See, e. g., id., at 14a–16a (PBGC Opinion Letter 85–25 (Oct. 11,
1985)) (describing such a sequence of transactions). This falls short of
rendering the merger a termination permitting recovery of surplus funds.
That a transfer of assets can occur in anticipation of a future termination
does not render that transfer itself a termination.

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
108 BECK v. PACE INT’L UNION
Opinion of the Court
Third, the structure of ERISA amply (if not conclusively)
supports the conclusion that § 1341(b)(3)(A)(ii) does not cover
merger. As noted above, merger is nowhere mentioned in
§ 1341, and is instead dealt with in an entirely different set of
statutory sections setting forth entirely different rules and
procedures. Compare § 1058 (general merger provision),
§ 1411 (mergers between multiemployer plans), and § 1412
(mergers between multiemployer and single-employer plans)
with § 1341 (termination of single-employer plans), § 1341a
(termination of multiemployer plans); see generally Veal &
Mackiewicz 31–40 (describing merger as an alternative to
plan termination). Section 1058, the general merger pro
vision, in fact quite clearly contemplates that merger and
termination are not one and the same, forbidding merger
“unless each participant in the plan would (if the plan
then terminated) receive a benefit immediately after the
merger . . . which is equal to or greater than the benefit he
would have been entitled to receive immediately before the
merger . . . (if the plan had then terminated).” (Emphasis
added.)
As for the different rules and procedures governing termi
nation and merger: Most critically, plans seeking to ter
minate must provide advance notice to the PBGC, as well
as extensive actuarial information. § 1341(b)(2)(A). The
PBGC has the authority to halt the termination if it deter
mines that plan assets are insufficient to cover plan liabili
ties. § 1341(b)(2)(C). Merger, by contrast, involves consid
erably less PBGC oversight, and the PBGC has no similar
ability to cancel, see Brief for United States as Amicus Cu
riae 24. And the rules governing notice to the PBGC are
either different or nonexistent. Section 1412, the provision
governing merger between a single and multiemployer plan
(the form of merger contemplated by PACE’s proposal)
makes no mention of early notice to the PBGC. And while
mergers between multiemployer plans do require 120-days

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
109 Cite as: 551 U. S. 96 (2007)
Opinion of the Court
advance notice, § 1411(b)(1), this still differs from the general
notice provision for termination of single-employer plans,
which requires notice to the PBGC “[a]s soon as practicable”
after notice is given to affected parties, § 1341(b)(2)(A). Re
latedly, § 1341(a)(2) also requires that, in a standard termi
nation, written notice to plan participants and beneficiaries
include “any related additional information required in
regulations of the [PBGC].” Those regulations require,
among other things, that the plan inform participants and
beneficiaries that upon distribution, “the PBGC no longer
guarantees . . . plan benefits.” 29 CFR § 4041.23(b)(9).
(This requirement of course has no relevance to a merger,
because after a merger the PBGC continues to guarantee
plan benefits.)
PACE believes that these procedural differences can be
ironed over rather easily. It insists:
“Many plan mergers take place without intent to termi
nate a plan; in those cases, the requirements for plan
merger can be followed without consulting the require
ments for plan termination. Conversely, many plan ter
minations take place without an associated merger; in
those cases there is no need to consult the requirements
for mergers. But if a plan sponsor intends to use
merger as a method of implementing a plan termination,
it simply must follow the rules for both merger and ter
mination.” Brief for Respondents 36.
PACE similarly explains that while the PBGC does not ap
prove “ordinary merger[s],” PBGC approval would be neces
sary when a merger is designed to terminate a plan. Id.,
at 37. The confusion invited by PACE’s proposed frame
work is alone enough to condemn it. How could a plan be
sure that it was in one box rather than the other? To avoid
the risk of liability, should it simply follow both sets of rules
all of the time? PACE’s proposal is flawed for another rea

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
110 BECK v. PACE INT’L UNION
Opinion of the Court
son as well: It has no apparent basis in the statute. The
separate provisions governing termination and merger quite
clearly treat the two as wholly different transactions,
with no exception for the case where merger is used for
termination.
For all of the foregoing reasons, we believe that the
PBGC’s construction of the statute is a permissible one, and
indeed the more plausible. Crown did not breach its fidu
ciary obligations in failing to consider PACE’s merger pro
posal because merger is not a permissible form of termina
tion. Even from a policy standpoint, the PBGC’s choice is
an eminently reasonable one, since termination by merger
could have detrimental consequences for plan beneficiaries
and plan sponsors alike. When a single-employer plan is
merged into a multiemployer plan, the original participants
and beneficiaries become dependent upon the financial well
being of the multiemployer plan and its contributing mem
bers. Assets of the single-employer plan (which in this case
were capable of fully funding plan liabilities) may be used to
satisfy commitments owed to other participants and benefi
ciaries of the (possibly underfunded) multiemployer plan.
The PBGC believes that this arrangement creates added risk
for participants and beneficiaries of the original plan, partic
ularly in view of the lesser guarantees that the PBGC pro
vides to multiemployer plans, compare § 1322 with § 1322a.
See Brief for United States as Amicus Curiae 29, and n. 11.
For employers, the ill effects are demonstrated by the facts
of this very case: By diligently funding its pension plans,
Crown became the bait for a union bent on obtaining a sur
plus that was rightfully Crown’s. All this after Crown pur
chased an annuity that none dispute was sufficient to satisfy
its commitments to plan participants and beneficiaries.
* * *
We hold that merger is not a permissible method of termi
nating a single-employer defined-benefit pension plan. The

551US1 Unit: $U54 [02-19-09 10:59:37] PAGES PGT: OPIN
111 Cite as: 551 U. S. 96 (2007)
Opinion of the Court
judgment of the Court of Appeals is reversed, and the case
is remanded for further proceedings consistent with this
opinion.
It is so ordered.