This is one in a rash of plan forfeiture lawsuits, which allege that a company used assets forfeited by workers for its own financial gain. Earlier this month, Trader Joe’s workers sued over misuse of forfeited funds, as well as “needlessly high” 401(k) fees. The spate of forfeiture suits began with a Department of Labor lawsuit against a tech company, which challenged how the plan sponsor used plan forfeitures. The case was settled in 2023; however, the plan terms required using forfeitures to lower plan expenses before using them to reduce employer contributions, according to the DOL’s complaint.

Here are some of the lawsuits that were filed in 2024:

• Siemens, the global technology and manufacturing company, was accused in a class-action lawsuit of misusing forfeited retirement funds in its $8.9 billion 401(k) plan.
  
• Bank of America was sued by 401(k) plan participants for “wrongfully and consistently used forfeited non-invested plan assets for its own benefit, to reduce future employer contributions, rather than for the benefit of plan participants," according to the lawsuit.
  
• Wells Fargo was sued for violating ERISA and “wrongfully and consistently” misusing $2,020,000 in forfeited 401(k) plan assets for the company’s own benefit instead of the best interests of its participants.

She further stated, “If given the option between using forfeited funds to pay administrative costs or to reduce employer contributions, a fiduciary is always required to choose to pay administrative costs. But the flaw in such a theory is that it is not limited to any particular circumstances that may be present in this case.”

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From: BenefitsPRO