Wells Fargo latest to be sued over forfeited 401(k) money
Wells Fargo this week became the latest employer to be sued over how it uses forfeited 401(k) assets.
On Tuesday, a plaintiff filed a proposed class action in US District Court in the Northern District of California, alleging that the company, along with its human resources committee of the board of directors, and employee benefit review committee violated the Employee Retirement Income Security Act by misusing employer contributions forfeited by workers who left before being fully vested. The company has used such assets, to the tune of more than $2 million in 2022, to offset its future contributions to the $45.8 billion Wells Fargo 401(k) plan, rather than to help reduce expenses for plan participants, according to the lawsuit.
“By choosing to use forfeited plan assets to benefit itself and not the plan or the plan’s participants, defendants have placed its own interests above the interests of the plan and its participants,” the June 11 complaint read.
The lawsuit is seeking restoration of plan assets as well as attorneys’ fees and other potential relief.
A Wells Fargo spokesperson said the company declines to comment on the litigation.
Early trend
This year there have been about 10 cases filed with similar allegations against employers, including lawsuits against HP, Honeywell, Clorox, Mattel, Intuit, and Thermo Fisher Scientific. In May, a case brought against Qualcomm cleared its first major hurdle, surviving a motion to dismiss.
Lawyers who specialize in ERISA have noted that the line of litigation is novel and that federal tax code, as well as the Department of Labor, have allowed forfeited plan assets to be used for future employer contributions to 401(k)s, as long as the plan document identifies how the
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