boston.com Business your connection to The Boston Globe

Bank's retirement plans face IRS audit

CHARLOTTE, N.C. -- The Internal Revenue Service is auditing the 1998 and 1999 tax returns of Bank of America Corp.'s pension and 401(k) plans, which have been the subject of a class-action employee lawsuit. The nation's third-largest bank disclosed the audit in a Securities and Exchange Commission filing.

This summer, some employees sued the bank over its cash-balance pension plan, which they say the company used as part of an ''arbitrage scheme" to enrich itself, at the expense of participants. According to the complaint, Bank of America encouraged employees to transfer more than $2.7 billion of 401(k) assets into the bank's pension plan in 1998 and 2000. The lawsuit, filed June 30 in federal court in Illinois, alleges those transfers allowed Bank of America to invest the money for higher returns than what the bank would dole out to employees.

Bank of America spokeswoman Eloise Hale said the bank has offered cash-balance plans for many years. ''We believe that our plans have been designed and administered in accordance with applicable law," she said.

Bank of America also disclosed a class-action suit was filed in September in Connecticut by ex-FleetBoston Financial Corp. employees. It alleges Fleet violated the law by converting to a cash-balance plan in 1997 without telling employees it would reduce benefits. Bank of America acquired Boston-based Fleet in April.

SEARCH THE ARCHIVES
 
Today (free)
Yesterday (free)
Past 30 days
Last 12 months
 Advanced search / Historic Archives