Late last year a Pasadena, California law firm launched a series of suits alleging that the use of forfeitures to offset employer contributions was a fiduciary breach—Nevin (Adams) and Fred (Reish) look at the issue(s) this raises.
“If this is the law, then that would be news to Congress and the regulatory agencies, which have declared for decades that forfeitures can be used in this manner,” says a recent motion to dismiss a lawsuit alleging a fiduciary breach in offsetting employer contributions with forfeitures.
The motion to dismiss speaks to charges made in a suit filed against Intuit, less than two weeks after filing an identical action against the Thermo Fisher Scientific Inc. 401(k) Retirement Plan. This suit, filed in the Northern District of California, acknowledges that “the Plan provides that forfeited nonvested accounts may be used to pay Plan administrative expenses or reduce future Company matching contributions.” Its language mirrors almost exactly three other such suits filed in either the Northern or Southern districts in California, including Clorox, Qualcomm and HP—all of which operated with plan documents that permitted—but did not require—that offset.
Also in this episode—the Labor Department lends support to an appeal of an excessive fee suit won by Yale University!
Episode Resources—Forfeitures
Two More Suits Say Forfeiture Reallocation Was a Fiduciary Breach
Defendants Move to Dismiss Forfeiture Fiduciary Breach Suit
DOL Successfully Sues Employer for Misuse of Forfeitures
Intuit Files to Dismiss Forfeiture Fiduciary Breach Suit
Episode Resources—Yale Appeal
DOL Says Yale Plaintiffs ‘Should’ Get Another Shot in 403(b) Suit
Yale Prevails in 403(b) Excessive Fee Suit
