Preheat oven to 350F. Grease and flour three 6" cake rounds and line with parchment.
In a medium bowl, whisk flour, baking powder, pudding mix, and salt until well combined. Set aside.
Using a stand mixer fitted with a paddle attachment, cream butter and sugar on med-high until pale and fluffy (approx 3mins).
Reduce speed and add eggs one at a time fully incorporating after each addition. Add vanilla.
Alternate adding flour mixture and cream soda, beginning and ending with flour (3 additions of flour and 2 of cream soda). Fully incorporating after each addition.
Bake for about 40mins or until a toothpick inserted into the center comes out clean.
Place cakes on wire rack to cool for 10mins then turn out onto wire rack. Allow to cool completely.
Beat butter until creamy. Add powdered sugar 1 cup at a time. Beat for 3 mins.
Add marshmallow fluff and vanilla extract and beat until fluffy (2-3mins).
Place one layer of cake on a cake stand or serving plate. Top with 2/3 cup of frosting and spread evenly. Top with 1-2 Tbsp butterscotch sauce (optional), swirl into frosting. Repeat with remaining layers and apply a thin coat of frosting all over the cake. Chill for 20mins. ***
Use the remaining frosting to frost the top and sides of the cake. Chill for 20mins.
Using a teaspoon, drizzle butterscotch sauce along the top edges of the chilled cake, allowing some to drip down. Pipe dollops on the top using an Ateco 867 or Wilton 6B tip. Fill in the top of the cake with more butterscotch sauce and spread evenly. Sprinkle with gold sanding sugar if desired.
* Regular vanilla will work ok.** I boiled mine for about 5mins to reduce it a bit as it was a little on the thin side. You can also use homemade.*** Adding butterscotch sauce between the layers is a delicious flavor burst, but it will make your cake a little more susceptible to sliding around during assembly. You can place 3-4 bamboo skewers into the top of the cake as support. You'll need to trim the skewers to the proper height of the cake.Marshmallow buttercream recipe adapted from The Cake Blog.