PwC Cleared of Anti-Cutback Claims over BofA Plan Transfers

A federal court has dismissed claims that PricewaterhouseCoopers knowingly participated in a violation of the Employee Retirement Income Security Act (ERISA) anti-cutback rule by allowing Bank of America to transfer assets from its 401(k) plan to its cash balance plan.

District Judge Graham C. Mullen of the U.S. District Court for the Western District of North Carolina found PwC is not subject to equitable measures based on its acts as the designer of the scheme to transfer plan assets.  Mullen said the plaintiffs did not cite any provision within ERISA stating that it is unlawful to design a plan that would violate ERISA.  

He noted that under the broadest reading of § 502(a)(3), which allows for claims against non-fiduciaries even if the underlying ERISA violation was a non-fiduciary act, PwC cannot be enjoined for designing an unlawful plan, because ERISA does not explicitly prohibit that conduct. 

Mullen also found that PwC is not subject to equitable measures based on its acts as outside auditor to BofA and the plans and contract administrator for the plans. He said plaintiffs point to no law under which an auditor is liable for violations of ERISA when the financial statements produced by the auditor were correct and produced in accordance with generally accepted accounting principles.  

He noted that there is no allegation that PwC failed to correctly account for the assets as they were actually allocated. Further, PwC’s actions as an auditor did not directly implement the plan. 

As contract administrator, PwC was allegedly “responsible for maintaining the plans’ books and records, including ‘claims payment.'” Mullen pointed out that the plaintiffs alleged they were deprived of their separate account protections under the 401(k) plan, a protected benefit under ERISA, and that deprivation has nothing to do with “claims payments.” 


The case concerns the Bank of America Pension Plan, which is a cash balance plan originally formulated in 1998 by NationsBank, under the guidance of PwC. The BAC Plan is a successor in interest to the NationsBank Pension Plan and the BankAmerica Pension Cash Balance Plan. The banks merged in 1998.  

Both NationsBank and Bank of America have or had 401(k) plans. Participants in these 401(k)s were given the option of transferring their accounts to the NationsBank Cash Balance Plan and the Bank of America Pension Plan, and thousands of participants elected to do so, according to the opinion. 

On July 1, 1998, $1.4 billion was transferred from the NationsBank 401(k) Plan to the NationsBank Cash Balance Plan, and on August 4, 2000, $1.3 billion was transferred from the Bank of America 401(k) Plan to the Bank of America Pension Plan. Both the plaintiffs and the IRS claim that these transfers violated ERISA. 

Mullen dismissed a claim that the cash balance plan was age discriminatory, noting that both parties agreed the claim was not viable.  However, he left on the table claims against BofA for violating anti-backloading rules and the anti-cutback rule. 

The case is Pender v. Bank of America Corp., W.D.N.C., No. 3:05-CV-238-MU, 4/7/10.