Forfeiture claims in the TE Connectivity 401(k) lawsuit are calculated as misapplied forfeitures plus out-of-pocket admin fees plus lost earnings on both. Barnes Dennig describes forfeitures as unvested employer matching or profit-sharing contributions left behind when workers leave before vesting. Bloomberg Law reports participant Arturo Silva alleges about 15,000 savers paid roughly $71 yearly for recordkeeping, per Bloomberg Law's coverage. He also alleges TE Connectivity used over $11 million in forfeitures for its own contributions, with $4.5 million in fee harm including lost earnings.
Official resources:
- Read the official guidance from Irs — Use this primary source to verify the official guidance.
- Read the original report from Openclassactions — Use this primary source to review the complete report.
Table of Contents
- What counts as a forfeiture?
- How is the dollar harm built?
- Why do recordkeeping fees matter so much?
- What limits these claims?
What counts as a forfeiture?
Barnes Dennig describes forfeitures as unvested employer matching, profit-sharing or non-elective contributions left when workers separate before finishing vesting. You keep your own deposits, but the unvested company piece can stay in the plan. That pool is what later fights are about. The IRS says forfeitures may be used only as the plan document allows.
The IRS lists paying reasonable administrative expenses, reducing future employer contributions, or reallocating to remaining accounts in the IRS Issue Snapshot. The dispute is not whether forfeitures exist. It is which allowed use the fiduciaries should have picked. Tax rules may allow that choice in some plans. ERISA suits argue it can still breach loyalty when workers pay the bills.
How is the dollar harm built?
OpenClassActions, reporting on Gardner-Keegan v. Grainger, describes the damages formula in three parts. It adds forfeitures used for employer contributions instead of expenses. It then adds fees workers paid out of pocket plus lost earnings on both, as explained in that OpenClassActions report. Bloomberg Law reports the TE complaint points to two buckets.
One bucket is more than $11 million in forfeitures said to have cut company contributions. The other bucket is fee harm of about $4.5 million including lost earnings. Lost earnings matter because money taken for fees cannot compound. A yearly charge plus years of missed growth forms a larger total. That is why complaints add investment loss to both the forfeiture and fee amounts.
- Forfeitures shifted to employer contributions
- Recordkeeping fees charged to accounts
- Lost growth on both amounts
Why do recordkeeping fees matter so much?
Bloomberg Law reports the TE plan allegedly charged about $71 per person yearly, against a $27 peer average. The gap suggests workers absorbed costs that forfeitures could have covered. That choice turns an employer funding decision into a direct account loss.
On a statement, this looks like a flat recordkeeping deduction. Over many participants and years, small per-person charges add up. Added loss of compounding then raises the claimed harm further.
What limits these claims?
WRE News reports a Michigan federal judge dismissed the UWM forfeiture suit on Sept. 25, 2026. The plan said the committee "may" pay expenses and unused forfeitures "shall" reduce contributions, as covered in the WRE News report on the UWM dismissal.
The Department of Labor has filed amicus briefs defending forfeiture offsets as longstanding and permissible, according to 401(k) Specialist. It argues the practice is not an ERISA fiduciary breach, including HP's 2019-2023 practice. Outcome often turns on exact plan text and fiduciary facts. If you hold a TE account, keep statements and pull the plan's forfeiture clause before judging impact.