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On March 16, 2026, a divided three-judge panel of the Sixth Circuit, in Reichert, et al. v. Kellogg Co., et al./Watt, et al. v. FedEx Corp., et al., sided with plaintiff-participants in a defined benefit plan actuarial equivalence lawsuit, reversing and remanding a lower court decision dismissing plaintiffs’ claims. In doing so, the Sixth Circuit found that ERISA requires that, in making a qualified joint and survivor annuity conversion, actuarial assumptions (in this case, mortality assumptions) must be reasonable.
In this note, we discuss the court’s decision, beginning with a brief outline of the issue and what is at stake.
This (consolidated) case involves two lawsuits, one brought by participants in two Kellogg Company DB plans and the other brought by participants in the FedEx DB plan. In each case, the participant-plaintiffs elected payment in the form of a qualified joint and survivor annuity (QJSA), and the conversion of the participants’ single life benefit to a QJSA was determined using mortality tables (including UP 1984 and the 1971 GAM) that were based on mortality data from the 1960s and 1970s. Plaintiffs argued that the data in these tables was “outdated,” and their use in a QJSA conversion violated the ERISA requirement that QJSAs be the “actuarial equivalent of a single annuity for the life of the participant.”
DB plans use of these and other (allegedly outdated) tables for determining QJSA, and other actuarial equivalence is not uncommon. If the courts decide that benefits that have been in pay status must be recalculated, and “back-payments” made, the cost – whether measured by company financials, cash flow, or a variety of other financial metrics – will be significant and in many cases material.
In dismissing plaintiffs’ claims, the lower court found that the statutory requirement of “actuarial equivalence” did not require the use of any particular mortality table. Indeed, the dissent in the Sixth Circuit’s decision argued that (literally) any mortality table could be used, including one “using data from the 1620s.”
In reversing and remanding the lower court’s decision, the Sixth Circuit found that the language in the statute requiring that QJSAs be the “actuarial equivalent of a single annuity for the life of the participant” implied a requirement that the actuarial factors used be reasonable, and that the use of “outdated” mortality tables would violate that requirement.
Broadly, the court identified two grounds for its conclusion that “actuarial equivalent” equals “reasonable assumptions.” First, the court reviewed the status of both relevant state law and of “actuarial science” at the time of ERISA’s adoption and found that it supported a conclusion that:
Accurately estimating the lifespan of the relevant participant … necessarily requires the use of mortality data reasonably reflecting the life expectancy of a retiree living in the present day. Accordingly, to provide a QJSA within the meaning of [ERISA], a plan must provide a joint and survivor annuity with an equivalent value to the single life annuity the participant would otherwise receive, and that equivalence requires reasonably accurate mortality data.
As the dissent notes, the court’s review of pre-ERISA law and of actuarial practice in this regard is selective – and there are multiple examples to the contrary.
Second, the court cited regulations under the related provision of the Tax Code (defining tax qualification rules for QJSA conversions) “that actuarial equivalence ‘may be determined, on the basis of consistently applied reasonable actuarial factors, for each participant or for all participants or reasonable groupings of participants.’” (Emphasis supplied by the court.)
As the dissent notes, this regulation is not an interpretation of ERISA, the statute under which plaintiffs’ lawsuits were brought. And there may be reasons why rules might apply for tax purposes (and remedies tailored to those rules) that do not, in effect, create participant rights under ERISA.
Another issue noted by the court with respect to this second argument is how much deference should be given to the IRS rule’s interpretation of “actuarial equivalence” in light of the Supreme Court’s decision in Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al., overturning the policy of judicial deference to agency interpretations under the Chevron doctrine. The Sixth Circuit argued that in this case, such deference was appropriate, given that:
The Treasury Department, as the agency charged with interpreting and enforcing much of ERISA, has extensive experience with and expertise over its substantive requirements, and its “roughly contemporaneous” and “consistent” understanding of the actuarial equivalence requirement is entitled to great respect.
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It’s conceivable that, on remand, the lower court could find that the defendants’ use of UP 1984 and the GAM 1971 mortality tables was, under the circumstances, reasonable. But, given the stakes, it’s possible (even likely) that the defendants will settle.
Other courts in “actuarial equivalence” litigation in other circuits have reached a different conclusion, in effect agreeing with the lower court in this case that there is nothing in the statute that requires the use of any specific actuarial table or precludes the use of tables used by defendant-sponsors in those cases.
In this context, a review by the Supreme Court of at least one of these actuarial equivalence cases remains a distinct possibility.
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We will continue to follow this issue.