A 401(k) forfeiture class action claims plan fiduciaries misused unvested employer contributions left behind by workers who left early. Only current or former participants in that employer's 401(k) plan can bring the claim on behalf of other participants in the same plan.
Forfeitures are the nonvested part of employer matching contributions left when an employee leaves before full vesting. The plan holds that money in a separate forfeiture account, according to Trucker Huss in its forfeiture litigation review. The IRS states that a plan may use those funds to pay administrative costs, reduce employer contributions, or add to other participants' benefits.
Official resources:
- Read the official guidance from Irs — Use this primary source to verify the official guidance.
- Read the official notice from Sidley — Use this primary source to verify the official announcement.
Table of Contents
- How do 401(k) forfeitures work?
- What do the lawsuits allege?
- Who can file a claim?
- Where do these cases stand?
- What should you check next?
How do 401(k) forfeitures work?
Vesting sets when employer contributions become yours to keep. If you leave before that date, you keep your own deposits plus any vested employer match. The unvested employer match stays in the plan as a forfeiture.
The plan document controls what happens next. The IRS states that forfeitures may pay plan expenses, lower future employer contributions, or increase benefits for remaining participants, as the plan specifies. The IRS proposed in Feb. 2023 to codify those three uses and generally require use within 12 months after the plan year they arise, according to Kelley Drye.
What do the lawsuits allege?
These suits challenge one choice among those allowed uses. They allege fiduciaries breached loyalty, prudence, anti-inurement, or prohibited-transaction rules by using forfeitures to offset employer contributions instead of paying costs borne by participants, according to Bond Schoeneck and King in its forfeiture litigation analysis.
In plain terms, plaintiffs say workers paid more in fees or lost growth because the employer kept its own costs down. Defendants respond that the plan allowed that choice and ERISA permits it. That dispute over expense payment versus contribution funding sits at the center of each case.
Who can file a claim?
These cases are brought by current or former participants in the defendant's own 401(k) plan, on behalf of similarly situated participants, according to Sidley Austin in its ruling summary on Perez-Cruet v. Qualcomm.
You cannot join a case tied to another company's plan. Your link is your participation in the sued plan during the period covered by the suit.
- You participated in the named employer's 401(k) plan during the class period.
- You paid administrative costs or held an account affected by forfeiture use.
- Your plan language did not require the employer-first use you challenge.
Where do these cases stand?
More than fifty such cases were pending nationwide by late 2025. Most early rulings favor defendants because ERISA does not require paying expenses rather than funding contributions, according to Trucker Huss. Courts often treat the choice as lawful when the plan document permits it.
The Labor Department backs that defense view in a key case. On July 9, 2025, the Department filed an amicus brief for HP in Hutchins v. HP, agreeing that using forfeitures for matching contributions under plan terms does not plausibly state a fiduciary-breach claim, according to Miller and Chevalier in its ERISA litigation update. A Michigan judge also dismissed claims against United Wholesale Mortgage where the plan allowed forfeitures to reduce contributions, according to the National Association of Plan Advisors.
What should you check next?
Start with your own plan papers, not headlines about other employers. Read the summary plan description and fee notices for rules on forfeitures, expenses, and employer contributions. Compare what the document allows with what your statements show for fees and employer funding.
- Identify the exact plan name, employer, and years you participated.
- Save statements, fee disclosures, and the summary plan description.
- Watch for a class notice or settlement notice tied to that plan name.
- Talk to an ERISA lawyer before filing alone, since plan language often decides the outcome.