JPMorgan Is the Latest Employer to Get Sued over ‘Wrongful Use’ of 401(k) Forfeited Funds

The JPMorgan Chase & Co. headquarters on Park Avenue in New York City. Photo: Katherine Welles/Adobe Stock

JPMorgan Chase is the latest employer to face a class-action lawsuit over misuse of 401(k) funds. The suit alleges that the company breached its fiduciary duty under the Employee Retirement Income Security Act (ERISA) by using retirement plan contributions forfeited by departing employees who were not yet fully vested in the plan to “offset its employer contributions,” according to the class-action complaint, Wright v. JPMorgan Chase & Co. et al.

Rather than using forfeited funds to reduce the 401(k) plan’s administrative fees for participants, JPMorgan mismanaged the plan by using the funds “for its own benefit,” according to the complaint filed last Tuesday in the U.S. District Court for the Central District of California. The funds from 401(k) forfeitures lowered the employer contributions JPMorgan would otherwise need to make to its employees’ retirement plan, according to plaintiff Daniel Wright. The banking giant saved “millions of dollars in contribution costs” by failing to act in the “best interest of the plan’s participants,” according to the suit.