Background
A retirement-plan participant alleged that Liberty Mutual and plan fiduciaries improperly used forfeited employer contributions to offset future employer contributions rather than pay plan expenses or increase participant benefits. He framed the practice as a breach of ERISA fiduciary duties and a prohibited transaction.
The Court’s Holding
The court dismissed the complaint with leave to amend. The plan language and pleaded facts permitted the use of forfeitures at issue, and the alleged conduct did not become fiduciary self-dealing merely because it reduced amounts the employer otherwise would contribute. The court was skeptical that the theory could be cured but allowed a limited amendment.
Key Takeaways
- ERISA challenge to using forfeited contributions to reduce future employer contributions is dismissed with leave to amend.
- The ruling turns on the governing legal standard and the specific evidentiary record, not labels alone.
- Practitioners should preserve a clear, fact-linked record for review and remedy.
Why It Matters
Employers and plan committees should ensure forfeiture practices track plan documents and governing regulations. Participant counsel must distinguish a settlor or contribution decision from discretionary management of plan assets and plead facts showing why the challenged use violates a fiduciary obligation despite plan authorization.
Read the full opinion (PDF) · Court docket