In the Press
April 12, 2024

Rash Of 401(k) Forfeiture Suits Approach First Hurdles (Law360)


Several recent lawsuits challenging how employers use 401(k) forfeitures — which occur when a worker leaves before an employer's matching contributions fully vest — are approaching critical early tests, with rulings expected on dismissal bids in the coming months. Forfeiture cases hinge on whether 401(k) plan participants can win their argument that spending forfeitures qualifies as a fiduciary duty under ERISA. "I think plaintiffs are probably hedging their bets," said Jamie Fleckner, partner and chair of  ERISA litigation practice. "Once we see how courts address the forfeiture cases, in the pending motions to dismiss in the earlier-filed cases, then we'll have a better sense of what plaintiffs lawyers will do," Fleckner added. Claims using forfeitures to reduce contributions instead of lower fees breached ERISA. The recent cases mark an attempt by plaintiffs lawyers to "find new and creative ways to bring challenges under ERISA," Fleckner said to Law360.