What's at stake
Whether forfeited dollars should reduce employer cost or participant cost is now squarely a fiduciary question.
Defenses
Plan sponsors argue that explicit plan-document direction insulates the choice; courts are split.
Current Developments
The 401(k) Forfeiture-Lawsuit Wave
401(k) forfeiture lawsuits ask whether fiduciaries breached duties by directing forfeited employer-contribution dollars to reduce future employer contributions instead of defraying participant administrative fees. Dozens of cases against major employers are now pending in federal court.
By ERLG Editorial Team · Published 2026-04-18 · Updated 2026-05-29
Key takeaways
- • Forfeiture-allocation choices are now treated as fiduciary acts.
- • The plan document does not always control the analysis.
- • Outcomes vary widely by circuit and district.
It's general legal information, not legal advice. For a case-specific assessment, request a free review.
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