UnitedHealth Group is the latest big-name employer to get hit with a class action lawsuit over how it handles 401(k) forfeitures. The case, Kotalik et al. v. UnitedHealth Group Inc., accuses the company and its plan fiduciaries of violating ERISA by using more than $19 million in forfeited funds to offset employer contributions\u2014without applying any of it toward plan expenses.<\/p>\n
The plaintiffs, representing over 250,000 participants in a $22 billion plan, claim this cost-cutting move shortchanged participants by more than $25 million in compounded value. The lawsuit alleges five ERISA violations, including breaches of loyalty, prudence, and failure to monitor fiduciaries.<\/p>\n
This isn\u2019t UnitedHealth\u2019s first brush with ERISA trouble\u2014they recently settled a separate case for $69 million over mismanaged target-date fund investments.<\/p>\n
Here\u2019s the lesson: Forfeitures aren\u2019t free money. They\u2019re plan assets and must be handled according to the plan document and ERISA\u2019s exclusive benefit rule. If you\u2019re a plan sponsor, now\u2019s the time to review your forfeiture practices\u2014or risk being next in the litigation spotlight.<\/p>\n
<\/span><\/p>","protected":false},"excerpt":{"rendered":" UnitedHealth Group is the latest big-name employer to get hit with a class action lawsuit over how it handles 401(k) forfeitures. The case, Kotalik et al. v. UnitedHealth Group Inc., accuses the company and its plan fiduciaries of violating ERISA … Continue reading