Forfeiture cases...

[fmsinc]

Good article - 

https://www.mayerbrown.com/en/insights/publications/2025/08/revisiting-the-state-of-the-law-in-erisa-forfeitures-cases

[Peter Gulia]

Has anyone seen a complaint survive a motion to dismiss when the plan’s documents specified that forfeiture amounts are applied first against contributions and the documents provide no discretion to vary the plan-specified order for applying forfeitures?

[RatherBeGolfing]

1 hour ago, Peter Gulia said:

Has anyone seen a complaint survive a motion to dismiss when the plan’s documents specified that forfeiture amounts are applied first against contributions and the documents provide no discretion to vary the plan-specified order for applying forfeitures?

Not that I have seen.  FWIW, I draft my documents using forfeitures to pay fees first, then offset contributions, then any other permissible use. I do have some docs that first offset contributions, then pay fees, but those are getting phased out.  This is not necessarily in response to these forfeiture lawsuits

Taking your hypo a step further, wouldn't there still be discretion in how the document was drafted? 

*edited for clarity

[CuseFan]

I think a document that specifies the order of usage (or a single usage) would/should survive any challenge. The recent Home Depot dismissal basically said following the plan document is required by ERISA (duh).

Anyone else remember the simpler "olden days" when forfeitures either reduced employer contributions OR were allocated in addition to employer contributions and the sole method (no discretion/choice) had to be stated in the plan document?

[Peter Gulia]

Thanks.

Unlike a plan’s administrator, a plan’s sponsor may make plan-design choices without an ERISA fiduciary’s responsibility.

About forfeitures, the fiduciary-breach claims assert that a plan’s administrator had discretion and so ought to have loyally and prudently considered which way of applying forfeitures would be advantageous for the plan’s participants and their beneficiaries.

If a fiduciary lacks discretion, its duty is to obey “the documents and instruments governing the plan[.]” ERISA § 404(a)(1)(D).

In my experience, too often a plan’s governing documents grant the plan’s administrator some discretions an administrator might prefer not to be burdened by.

[CuseFan]

17 hours ago, Peter Gulia said:

too often a plan’s governing documents grant the plan’s administrator some discretions an administrator might prefer not to be burdened by

Exactly - discretion and flexibility are not always good to have!