Judge Dismisses Amazon 401(k) Forfeiture Suit

A federal judge in Seattle dismissed a proposed class action accusing Amazon of misusing millions of dollars in forfeited 401(k) assets, ruling that the company and its retirement plan fiduciaries followed the plan’s terms and did not breach their duties under the Employee Retirement Income Security Act.

The decision in Curtis v. Amazon.com Services LLC et al., on January 16,adds to a growing body of ERISA rulings rejecting employee challenges to how companies deploy forfeited retirement funds, an issue drawing heightened scrutiny as plaintiffs test whether employers must use forfeitures to pay plan expenses rather than reduce their own contributions. The ruling also aligns with recent employer-friendly amicus briefs issued by the Department of Labor in similar forfeiture disputes. In those briefs, the DOL has argued that ERISA does not require plan sponsors to use forfeited assets to pay administrative costs when plan documents permit other uses, a stance consistent with IRS guidance issued in 2023.

U.S. District Senior Judge Ricardo Martinez, presiding in U.S. District Court for the Western District of Washington, Seattle Division, granted Amazon’s motion to dismiss claims brought by former employees Cory Curtis and Jonathan Torres, who alleged that Amazon improperly used unvested matching contributions forfeited by departing workers to reduce the company’s future payments into the plan rather than to cover administrative fees.

The plaintiffs argued that by choosing that option, Amazon violated ERISA’s duties of loyalty and prudence and engaged in prohibited transactions. But Martinez found that the Amazon 401(k) plan expressly allowed fiduciaries to apply forfeitures to reduce employer contributions, pay plan expenses or restore accounts, and that courts have overwhelmingly rejected the theory advanced by the workers.

“This, in essence, would use the fiduciary duties of loyalty and prudence to create a new benefit to participants that is not provided in the plan document itself,” Martinez wrote in closing the case without leave to amend, meaning the plaintiffs cannot refile the complaint in the same court.

In the Amazon case, the plaintiffs alleged in a January 2025 filing that in 2018 alone, the company applied more than $21 million in forfeited assets to offset its matching obligations, leaving workers to shoulder plan expenses. Martinez said that approach was expressly authorized and consistent with “the settled understanding of Congress and the Treasury Department,” as cited in Dimou v. Thermo Fisher Sci. Inc.

Curtis and Torres were represented by the Terrell Marshall Law Group and the Sharman Law Firm. Amazon.com Services LLC, its 401(k) Committee and related defendants were represented by Covington & Burling LLP and Davis Wright Tremaine LLP.