Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.
DOL Files Amicus Brief in Support of Companies in 401(k) Plan Forfeiture Complaints
In filing an amicus brief to an appeal involving HP Inc., the Department of Labor offered guidance on an issue that has prompted dozens of new cases this year.
The U.S. Department of Labor filed a legal brief siding with HP Inc. in a dispute over how the company managed forfeited funds within its 401(k) retirement plan. The case, Hutchins v. HP Inc., challenges the legality of HP’s use of unvested matching contributions, a subject which has prompted more than 50 complaints this year under the Employee Retirement Income Security Act.
The lawsuit was filed in 2023 by Paul Hutchins, a participant in HP’s 401(k) plan, who claimed that from 2019 to 2023, the HP Plan Committee improperly used forfeited employer contributions—funds that had not vested when employees departed and were therefore left behind—to satisfy HP’s own matching obligations, rather than to offset administrative expenses. Hutchins alleged it constituted a breach of ERISA. A district court dismissed the case in 2024, and Hutchins appealed to the U.S. 9th Circuit Court of Appeals.
In its amicus brief filed July 9, the Department of Labor pushed back on Hutchins’ argument, stating that “a fiduciary’s use of forfeited employer contributions in the manner alleged in this case, without more, would not violate ERISA.”
The brief distinguished between fiduciary responsibilities and “settlor” decisions, which relate to the design and funding of benefit plans; such functions are not subject to ERISA’s fiduciary standards. According to the DOL, “funding a plan is a settlor function,” and employers retain discretion in deciding how to cover plan expenses or provide contributions.
Previous IRS guidance also stated that plan sponsors may use forfeited funds to offset future contributions or pay down plan expenses if noted in its plan documents.
The DOL also underscored that fiduciaries must act “with the care, skill, prudence, and diligence” required by ERISA, but asserted that Hutchins’ allegations failed to show a plausible violation. Specifically, the brief stated that the HP Plan Committee’s decision to allocate forfeitures toward matching contributions was both permissible under the plan’s terms and aligned with participants’ interests, because it ensured timely delivery of promised benefits.
In earlier proceedings, the U.S. District Court for the Northern District of California had already dismissed Hutchins’ complaint twice—once with leave to amend and then a second time in February without it. The court ruled that Hutchins’ theory would, if accepted, improperly require fiduciaries to favor administrative cost reduction over benefit funding, a requirement not supported by ERISA.
The DOL echoed this view, noting that Hutchins’ claims “fail to plausibly allege that a ‘proper’ investigation would have led to a different outcome.” The brief also stated that “there is no fiduciary duty to litigate” with a plan sponsor over contribution amounts, especially when participants are receiving the benefits promised under the plan.
The ERISA Industry Committee joined the DOL in the amicus brief.
The 9th Circuit is expected to rule on the case later this year, but the DOL’s position will likely impact the court’s decision and future cases. Daniel Aronowitz, who awaits a full Senate vote to confirm him as the head of the DOL’s Employee Benefits Security Administration, has said he plans to limit ERISA litigation. ERISA experts previously told PLANSPONSOR that amicus briefs from the department are one way to pursue that goal.
The plaintiff is represented by Hayes Pawlenko LLP, and the defendants by Morgan Lewis Bockius LLP.
You Might Also Like:

DOL Says Citi’s Diverse Asset Manager Program is Unlawful

District Court Sides With Challenges to DOL’s Fiduciary Standards
