An Emerging Trend in ERISA Class Action Litigation: 401(k) Forfeiture Suits

Litigation attorneys Monica Perkowski, Kayla Pragid, Lindsey Camp and Todd Wozniak co-authored an article featured in the Employee Benefit Plan Review examining the rise in Employee Retirement Income Security Act of 1974 (ERISA) class actions challenging the use of 401(k) plan forfeitures. Plaintiffs allege that using these forfeitures to offset future employer contributions may breach fiduciary duties under ERISA. Despite longstanding regulatory guidance allowing this practice, the lawsuits introduce a novel liability theory, which the authors contend emphasizes the need for plan sponsors to reassess their forfeiture terms to ensure compliance and mitigate litigation risks.

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