How to Stay Ahead of Retirement Plan Forfeitures and ERISA Lawsuits

Litigation attorneys Monica Perkowski and Lindsey Camp published an article in Today's General Counsel analyzing the rise in class action lawsuits alleging misuse of retirement plan forfeitures in violation of the Employee Retirement Income Security Act of 1974 (ERISA). Ms. Perkowski and Ms. Camp explain what forfeitures are, including what the U.S. Department of the Treasury, U.S. Department of Labor and ERISA say about their permitted uses. They then move to a discussion of the more than 80 class actions filed since September 2023, 31 of which have seen decisions on motions to dismiss – six of which are being appealed. They point out that most courts have rejected plaintiffs' arguments that using forfeitures to offset employer contributions instead of paying plan expenses is always unlawful, reasoning that the plaintiffs are not entitled to benefits beyond those promised in the plan. The article also explores how plan fiduciaries have fared in court in addition to sharing tips such as reviewing plan language and assessing plan communications to avert potential threats of litigation and ensure compliance with applicable law.

READ: How to Stay Ahead of Retirement Plan Forfeitures and ERISA Lawsuits