DOL Files Fifth Amicus Brief Backing 401(k) Fiduciaries in Forfeiture Litigation

The Department of Labor 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. 

The department argued that the plaintiffs’ theory of the case improperly expands fiduciary duties under the Employee Retirement Income Security Act to actions that are considered settlor functions. If the plaintiffs’ theory were adopted, the DOL argued, it could discourage employers from offering retirement plans by exposing routine plan design decisions to litigation, an argument the agency has offered in its previous amicus filings in forfeiture cases in separate appellate districts.

The July 24 filing is the Labor Department’s latest brief supporting employers whose use of forfeited, unvested 401(k) matching contributions has been challenged, underscoring the agency’s continued effort to shape the legal landscape. 

In its brief, the department argued that the case centers on a fundamental distinction in ERISA between employer settlor decisions—such as designing and funding a retirement plan—and fiduciary decisions involving plan administration. According to the department, the plaintiffs are improperly seeking to blur those roles by arguing that plan fiduciaries must always use forfeited funds to pay plan expenses, rather than reduce future employer contributions.

The department has taken the stance that choosing how to spend forfeiture funds is a settlor decision, meaning it is not subject to fiduciary liability under ERISA. 

The appeal stems from a lawsuit against North Carolina-based SAS Institute Inc., an artificial intelligence and data company, in which former employees challenged the company’s handling of forfeitures in its defined contribution retirement plan. Under the plan documents, forfeited employer matching contributions are first used to restore previously forfeited participant balances, with any remaining amounts available either to reduce future employer contributions or to pay plan administrative expenses. Between 2018 and 2023, SAS primarily used the more than $4 million in forfeitures to offset future contributions, although it allocated more than $222,000 toward plan expenses in 2022.

U.S. District Court for the District of the Eastern District of North Carolina dismissed the case twice before plaintiffs appealed to the appellate court.

The DOL’s brief argued that ERISA protects “contractually defined benefits” and that participants have no contractual entitlement requiring plan fiduciaries to consistently use forfeitures to pay administrative expenses. The agency stated that ERISA requires a prudent and loyal decisionmaking process, rather than mandating a particular outcome in every case.

The brief also warned that adopting the plaintiffs’ theory would have broader consequences beyond the SAS case. According to the department, employers could respond by eliminating discretionary plan provisions that sometimes benefit participants or, more broadly, reconsider sponsoring retirement plans altogether because of increased litigation risk. According to the department, preserving employer flexibility in plan design ultimately serves workers by encouraging the creation and maintenance of retirement plans.

The department has put forth this argument in its several other amicus filings.

Separately, the U.S. Chamber of Commerce and the ERISA Industry Committee filed their own amicus brief supporting SAS and supporting the district court’s dismissal of the case. The groups argued that the plaintiffs seek to impose liability for practices that Congress, the Department of the Treasury, the DOL and plan sponsors have long understood to be permissible and warned that disrupting those settled expectations would harm both employers and employees. They also argued the appeal raises broader issues affecting ERISA pleading standards and retirement plan administration.

The groups have frequently joined the DOL in backing employers in forfeiture cases.

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