Plan participant Arturo Silva filed a federal proposed class action against TE Connectivity. He alleges its 401(k) fiduciaries breached federal retirement law through excessive recordkeeping fees and self-interested use of forfeited funds. A 401(k) is an employer-sponsored retirement savings plan with individual accounts for workers. The suit seeks to represent roughly 15,000 participants in the TE Connectivity plan.
Official resources:
- Read the official notice from Gibsondunn — Use this primary source to verify the official announcement.
- Read the official notice from Mayerbrown — Use this primary source to verify the official announcement.
Table of Contents
- How large were the alleged recordkeeping fees?
- What forfeited funds are at issue?
- Why does the offset choice draw a legal challenge?
- Is this case an outlier?
- What could a win mean for TE participants?
How large were the alleged recordkeeping fees?
A recordkeeping fee pays for day-to-day plan administration, such as maintaining accounts and processing transactions. Bloomberg Law reports the TE plan charged participants an average of $71 per person each year, more than double the $27 average for comparable plans, in its Bloomberg Law account of the suit.
The complaint estimates those higher fees cost participants about $4.5 million after lost investment earnings. That figure reflects both money paid out and growth that money could have earned if it stayed invested.
What forfeited funds are at issue?
Forfeitures are unvested employer contributions left behind when workers leave before their benefits vest. Plan terms typically allow using them for expenses, reducing future employer contributions, or reallocating them to participants.
Silva alleges TE Connectivity used more than $11 million in forfeitures to reduce its own employer contributions instead of paying administrative costs borne by participants. Bloomberg Law describes that $11 million offset claim in its Bloomberg Law report on fees and forfeitures.
Why does the offset choice draw a legal challenge?
Plaintiffs in these cases argue fiduciaries must act solely for participants and manage plan assets with care. A Gibson Dunn analysis explains the common theory: choosing contribution offsets over paying participant-borne costs or reallocating funds violates loyalty and prudence duties, the anti-inurement rule, and prohibited-transaction rules, detailed in its Gibson Dunn update on forfeiture litigation.
In plain terms, the dispute is who benefits from the leftover money. Plaintiffs say using it to lower the employer's bill helps the company while participants keep paying fees that forfeitures could have covered.
Is this case an outlier?
The TE case joins about 100 similar federal forfeiture-offset suits filed since 2023. Those cases challenge a longstanding Treasury-recognized practice, and most district courts to decide the issue have granted dismissal.
These remain unproven allegations at the pleading stage. Goodwin, summarized through Legal500, notes the Eighth Circuit in Matula v. Wells Fargo became the first appellate court in 2026 to affirm dismissal of a forfeiture-offset challenge on standing grounds, as described in its Legal500 ERISA litigation update.
What could a win mean for TE participants?
If plaintiffs prevail, forfeitures would instead pay administrative costs or be reallocated to participant accounts. That shift would reduce out-of-pocket fees and preserve account balances for the affected group. Participants can compare their own statement's fee line with the $71 average cited in the complaint.
- Check quarterly statements for the administrative and recordkeeping charge
- Compare that charge with the $71 average alleged in the complaint
- Watch whether the court allows the case past dismissal motions
- Keep employment and account records if later notice or claim steps follow