Employers managing 401(k) assets forfeited by former employees are facing a series of lawsuits that broaden the scope of disputes concerning excessive fees. These suits fuse two types of claims: one alleging violations of the Employee Retirement Income Security Act (ERISA) and another focusing on the traditionally contentious issue of high plan fees. Legal experts are closely monitoring how courts handle these combined claims, as initial judicial decisions suggest a trend favoring the plaintiffs’ position.
Recently, a federal judge in California ruled that former employees of Qualcomm Inc. could proceed with their claim. These employees argued that the company misused forfeited 401(k) funds to offset administrative costs, putting its financial interests over those of plan participants. Such actions, they claim, are a breach of fiduciary duty under ERISA.
Other major corporations, including Wells Fargo & Co. and Honeywell International Inc., are also facing similar allegations. For instance, complaints have been lodged against these firms, asserting that the use of non-vested funds from departed employees to reduce employer contributions violates benefit laws.
These developments indicate an accelerating trend where plaintiffs leverage 401(k) forfeiture grievances to reinforce their excessive fee lawsuits, potentially opening new avenues for legal recourse under ERISA. Legal professionals and corporate counsel should watch these cases closely, as their outcomes could significantly impact future litigation and compliance strategies.
For further details, please refer to the original article on Bloomberg Law.