David McCorkle v. Bank of America Corporation
688 F.3d 164
4th Cir.2012Background
- Plaintiffs allege Bank of America Pension Plan uses an NRA that violates ERISA in lump-sum and backloading calculations.
- Plan is a cash balance defined-benefit plan; NRA defined as the earlier of five years vesting or age 65, whichever comes first.
- NRA designed to avoid whipsaw; whipsaw is the discrepancy between cash balance lump-sum and NRA projection for early termination.
- ERISA anti-backloading applicable pre-NRA; Plan provides Compensation Credits with Unit Points leading to tiered increases post-NRA.
- District court dismissed Counts One (lump-sum timing) and Three (backloading); Fry v. Exelon endorsed NRA as valid; Plan amended in 2008 to NRA = 65; appeal concerns pre-2008 Plan.
- Court’s review focuses on whether NRA compliance defeats backloading and whether SPD misleads participants, with consideration of post-hoc amendments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Plan’s NRA valid under ERISA §1002(24)? | Plaintiffs contend NRA improper as applied. | Bank argues NRA is compliant and valid under §1002(24). | Yes; NRA valid under §1002(24). |
| Does the NRA cause impermissible backloading under ERISA prior to NRA? | NRA definitions used to backload benefits before NRA. | Backloading rules do not apply once NRA is reached; plan’s pre-NRA accrual not backloading. | No; backloading claim fails given valid NRA. |
| Did the SPD mislead participants about benefit accrual calculations? | SPD allegedly described NRA inaccurately. | SPD aligns with Plan terms; no prejudice shown; Amara not triggered. | SPD does not conflict with Plan; no remand required. |
| Do IRS Notice 2007-69 and change-the-base regulation retroactively apply to invalidate NRA? | Notice 2007-69 requires NRA to reflect industry retirement age; retroactive impact argued. | Notice 2007-69 is prospective; plan frozen during relevant period; no retroactive effect. | Prospective guidance; does not retroactively invalidate NRA; backloading claim remains unsupported. |
Key Cases Cited
- Fry v. Exelon Corp. Cash Balance Pension Plan, 571 F.3d 644 (7th Cir. 2009) (NRA five-year-service definition deemed ERISA-compliant)
- West v. AK Steel Corp., 484 F.3d 395 (6th Cir. 2007) (IRS guidance on NRA and backloading relevance)
- Langman v. Laub, 328 F.3d 68 (2d Cir. 2003) (Backloading prohibition aims to prevent late-year accrual concentration)