ERIC Backs Dismissal of WPP Forfeiture Suit

The ERISA Industry Committee filed on Monday an amicus brief with the U.S. 2nd Circuit Court of Appeals urging the court to affirm the dismissal of a suit accusing WPP Group USA Inc. and its retirement plan committee of misusing employee plan forfeitures to offset company costs rather than benefiting plan participants.

The brief in Polanco v. WPP Group USA Inc. et al. contended that the district court correctly dismissed in November plaintiffs Rafael Polanco and Monique Johnson’s claim that WPP and its plan administrators breached fiduciary duties or engaged in prohibited self-dealing by using forfeited funds in the plan to reduce future employer contributions instead of paying plan administrative expenses.

The plaintiffs filed the initial complaint in 2024 and sought to represent a class of WPP employees participating in the plan since 2018. Plaintiffs claimed five separate Employee Retirement Income Security Act violations, including prohibited transactions and breaches of the duties of loyalty and prudence.

ERIC argued in its brief that WPP’s retirement plan gives its committee the choice whether to use forfeited funds to pay administrative expenses, benefits for returning employees or future employer contributions. The committee used most forfeitures to offset the company’s upcoming contributions, which is expressly allowed by both the plan document and federal regulations, the trade group contended.

The brief stated that Congress, the Department of Treasury and the Internal Revenue Service have long treated the practice of using forfeitures in ways that a plan sponsor’s document permit as lawful and that ERISA “should not be read to forbid what federal tax law explicitly permits.”

In addition, the trade group contended in its filing that the plaintiffs’ theory fails because nothing in ERISA requires plan participants to receive more than they were contractually promised.

In a statement accompanying the filing, ERIC Legal Center Executive Director Doug Hinson stated that WPP’s plan says in “plain terms” that it is the company’s choice to use forfeited contributions to reduce what it owes to manage a 401(k) plan. He warned that allowing the claims to proceed would “upend a practice regulators have accepted for generations and expose responsible employers to lawsuits over conduct everyone understood to be lawful.”

The appeal follows a broader wave of litigation targeting employers’ use of forfeited funds. The Department of Labor has consistently sided with employers in forfeiture litigation despite a surge of participant lawsuits.

Plaintiffs filed 48 plan forfeiture complaints in 2025, according to Encore Fiduciary, up from 29 in 2024.

In July, the DOL filed its fifth amicus brief in a wave of ERISA forfeiture lawsuits, urging the U.S. 4th Circuit Court of Appeals to uphold the dismissal of claims against SAS Institute over its use of forfeited 401(k) contributions. Other filings from the DOL include appeals involving HP Inc., Siemens Corp. and Honeywell International.

The 2nd Circuit hears appeals from federal district courts in Connecticut, New York and Vermont.