FOLLOW US

A North Carolina federal judge has refused to dismiss a proposed class action against Bank of America, affirming claims that the bank misused 401(k) plan forfeitures in violation of federal benefits law. The decision allows the Bank of America 401(k) forfeiture suit to move forward.

U.S. District Judge Max O. Cogburn Jr. denied Bank of America’s motion to dismiss the Employee Retirement Income Security Act (ERISA) lawsuit filed by Esmeralda Becerra, a participant in the bank’s employee 401(k) plan, on behalf of a proposed class of plan participants.

Judge Cogburn found that Becerra had adequately alleged that Bank of America, its benefits committee, and other company defendants acted as fiduciaries to the plan and breached their duties by using plan assets to reduce new employer contributions. The judge also upheld claims that the bank violated ERISA’s anti-inurement provision, which prohibits plan assets from benefiting an employer and mandates that assets be used exclusively for plan participants.

Additionally, the court allowed claims concerning ERISA-prohibited transactions and failure-to-monitor allegations to proceed, noting that the use of forfeitures to offset employer contributions could constitute prohibited self-dealing.

Becerra initially filed her lawsuit in California in August 2024, with the case later transferred to North Carolina in October. Her amended complaint, filed in March 2025, asserts that Bank of America’s allocation of forfeitures to reduce employer obligations rather than cover plan expenses violated federal benefits law.

“We appreciate the court’s ruling, which we believe correctly applies ERISA’s law regarding the defendant’s use of forfeitures, and we look forward to prosecuting the case,” said Vahan Mikayelyan, attorney for the proposed class.

Becerra is represented by Joshua H. Haffner, Alfredo Torrijos, and Vahan Mikayelyan of Haffner Law PC, and Norris Arden Adams II of Essex Richards PA. Bank of America is represented by Robert A. Muckenfuss and Zachary L. McCamey of McGuireWoods LLP, and Jeremy P. Blumenfeld, Mary Ann F. McNulty, and Matthew A. Russell of Morgan Lewis & Bockius LLP.

The case is Becerra v. Bank of America Corp. et al., case number 3:24-cv-00921, in the U.S. District Court for the Western District of North Carolina.