Carter v. Commissioner, 746 F.3d 318

A. Finkl & Sons amended its defined-benefit pension plan on Jan 28, 2008 to add Section 11.6 providing for immediate distributions in connection with a contemplated plan termination; Finkl later decided not to terminate and deleted Section 11.6 by amendment on May 27, 2008.
Seven employees (appellants) sued under ERISA and the Internal Revenue Code claiming the May 27 amendment violated the plan’s anti-cutback provisions and entitled them to immediate distributions while still employed.
District court granted summary judgment to Finkl; this court affirmed in Carter v. Pension Plan of A. Finkl & Sons Co., 654 F.3d 719 (7th Cir. 2011), holding the plan did not terminate and the January 28 distribution was not an accrued benefit protected by ERISA or the I.R.C.
After the IRS issued a favorable determination letter that the plan remained qualified, appellants petitioned the U.S. Tax Court under I.R.C. § 7476 to challenge that determination; Finkl and the Commissioner asserted collateral estoppel based on Carter.
The Tax Court held appellants were collaterally estopped from relitigating whether the plan had terminated; this appeal affirms that ruling.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Tax Court proceeding is barred by collateral estoppel (issue preclusion)	Appellants: Tax Court need not follow Carter on a technical IRC/regulatory point (29 C.F.R. § 4041.28(a)); the Commissioner’s favorable letter could still be wrong and merits review.	Commissioner & Finkl: Carter conclusively decided the core issue—Finkl did not terminate the plan—so the Tax Court cannot relitigate that in a §7476 action.	Held: Collateral estoppel applies; appellants had a full and fair opportunity and appealed Carter, so the Tax Court is precluded from relitigating plan termination.
Whether the Jan 28, 2008 amendment created an accrued, anti-cutback-protected benefit	Appellants: The Jan 28 distribution right was protected; deleting it violated anti-cutback rules.	Finkl/Court (Carter): The plan never terminated, so the Jan 28 payment was not an accrued benefit and not protected by ERISA §204(g) or I.R.C. §411(d)(6).	Held (by prior Carter decision, applied here): No accrued benefit existed because the plan did not terminate; anti-cutback protection does not apply.

Carter v. Pension Plan of A. Finkl & Sons Co., 654 F.3d 719 (7th Cir. 2011) (held the plan did not terminate and the Jan. 28 distribution was not an accrued, anti-cutback-protected benefit)
Square D Co. & Subsidiaries v. Comm’r, 438 F.3d 739 (7th Cir.) (standard of review for Tax Court factual and legal determinations)
In re Davis, 638 F.3d 549 (7th Cir.) (de novo review for whether an issue was litigated and resolved in prior action)
Montana v. United States, 440 U.S. 147 (1979) (defining collateral estoppel/issue preclusion principles)
DeGuelle v. Camilli, 724 F.3d 933 (7th Cir. 2013) (full and fair opportunity and meaningful appeal required for issue preclusion)
E.B. Harper & Co., Inc. v. Nortek, Inc., 104 F.3d 913 (7th Cir.) (consideration of prior record materials to determine preclusion)