A growing wave of lawsuits is challenging how major employers handle unvested 401(k) funds when workers leave their jobs early—specifically, whether using those forfeitures to cover company contributions violates federal benefits law. While most courts so far have ruled in favor of employers, several cases are still advancing, and two key appeals are pending in the Ninth Circuit. Legal experts say the outcome will likely hinge on the specific language in each company’s 401(k) plan.
See "Novel 401(k) Plan Forfeiture Usage Rulings Tilt Toward Employers", Jacklyn Wille, Bloomberg Law News, July 9, 2025