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IRS PROBING BANK OF AMERICA PENSION PLANS

The Internal Revenue Service is auditing the 1998 and 1999 tax returns of Bank of America Corp.'s pension and 401(k) plans.

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.

The complaint says 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 transfers allowed the bank to invest the money for higher returns than what the bank would dole out to employees.

Bank of America also disclosed that a class-action lawsuit was filed in September in Connecticut on behalf of former FleetBoston Financial Corp. employees.

That suit alleges that Fleet violated the Employee Retirement Income Security Act, or ERISA, 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.

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