Christine Cushman Quoted on Recent Litigation Trends in 401(k) Asset Reallocation


Christine Cushman, Employee Benefits attorney at Bricker Graydon, provided insights on the evolving legal landscape concerning the reallocation of 401(k) assets forfeited by former employees. As litigation increases over how employers use these funds, conflicting court rulings have highlighted a significant area of contention.

In recent cases, judges have delivered mixed messages on whether employers can use forfeited 401(k) funds for their own contributions. For instance, HP Inc. successfully defended its practice under the Employee Retirement Income Security Act (ERISA), while a judge did not dismiss allegation against Qualcomm Inc. prioritized its financial interests over its employees' benefits.

Cushman emphasized the importance of plan documents and compliance in determining fiduciary breaches. "To the extent the plan document provides that forfeitures can be used to pay plan expenses or reduce employer contributions, I do not think there is merit to say a fiduciary breached their duty by following the plan provision," she stated. Cushman warned that challenging these practices could undermine ERISA’s fiduciary structure.

This ongoing legal debate underscores the need for clear regulatory guidance and highlights the critical role of precise plan documentation in mitigating litigation risks. Read more from Bloomberg Law here.

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