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The ERISA Industry Committee (ERIC) and other organizations filed an amicus brief in Matula, Jr. v. Wells Fargo & Company (Matula), a 401(k) forfeiture case pending on appeal before the U.S. Court of Appeals for the Eighth Circuit. Matula is representative of a recent trend of class action lawsuits challenging retirement plan administrators and employers that use "forfeited" funds to offset plan expenses or employer contributions.
According to ERIC, the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code and Treasury Regulations have permitted employers to use forfeited funds to pay for their expenses and contributions. Plans accumulate forfeited funds when employees leave their employment before their 401(k) accounts are fully vested, which can result in forfeited employer contributions from those employees' accounts.
ERIC and its allies accuse plaintiffs' attorneys of filing 401(k) forfeiture claims despite employers handling forfeited funds in the same way for the past several decades. In its amicus brief, ERIC attacked the premise of these claims as "legally incoherent" and at risk of leaving plan sponsors with continued legal uncertainties about retirement plans they voluntarily offer to help their workers. ERIC, along with the U.S. Chamber of Commerce and the National Retail Federation, urged the appellate court to reject the appeal and uphold the decision of the federal district court.
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