Forfeiture Lawsuits
A District Court in New York has dismissed another forfeiture lawsuit. The judge ruled that the plan sponsors' use of forfeitures to offset employer contributions, rather than using them to reduce plan expense, was consistent with the plan’s governing documents and long-standing federal guidance. The judge indicated that the plan permitted this use of forfeitures and that plan participants were not deprived of any benefits provided by the plan. This second argument has gained traction, that plaintiffs are not harmed because the employer has met their financial obligations by making the contributions promised in the plan document.
In making this ruling, the court cited the Department of Labor’s (DOL) amicus brief filed in a separate forfeiture lawsuit (link to regulatory update). This is important because technically, the amicus brief only applies to the case in which it was filed. It is hoped that judges will continue to lean on the DOL amicus brief in support of future dismissals of these forfeiture cases.
Private Equity in Defined Contribution Plans
With all the talk about access to private equity in retirement plans, our Regulatory Update cited a case against Intel, which has utilized private equity in its plan since 2008. In this case, Intel offered a managed investment product that included a private equity sleeve as a relatively small percentage of the fund's assets. The plaintiffs claimed that offering the investments exposed them to undue risk and was therefore a breach of Intel’s fiduciary duty.
The case was dismissed in May 2025, allowing Intel to continue using private equity in its plan. Since publishing our Regulatory Update, we have learned that plaintiffs have appealed that decision to the Supreme Court.
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