DOL files another amicus brief in favor of employer fiduciaries in forfeiture case

On January 30, 2026, the Secretary of Labor filed an amicus brief in Barragan v. Honeywell Inc., one of an ongoing series of cases challenging plan fiduciaries that allocate defined contribution plan forfeitures to reduce employer-paid contributions rather than using them to reduce employee-paid expenses.

In this article we provide a very brief note on DOL’s arguments in this amicus brief.

Background

The case is similar to most recent forfeiture litigation: The Honeywell 401(k) plan provides that the plan administrator has the option to allocate forfeitures (e.g., where a participant separates from service before vesting) (1) to reduce otherwise required employer contributions or (2) to pay plan expenses otherwise paid by plan participants.

Plaintiffs argue that plan forfeitures are plan assets, that the plan administrator, as a plan fiduciary exercising discretion with respect to the allocation of those forfeitures, must allocate them to reduce plan expenses, because allocating them to reduce employer contributions would violate ERISA’s fiduciary duty to act “solely in the interest of [plan] participants and beneficiaries” (aka the fiduciary “duty of loyalty”).

DOL’s brief for defendant-fiduciaries

While (implicitly) conceding that the allocation of forfeitures under these circumstances is a fiduciary act, DOL argues that the allocation of them, by Honeywell fiduciaries, did not violate ERISA’s fiduciary duty of loyalty:

• As the district court held, “[plaintiffs’] theory would impose liability beyond ERISA’s requirements by ‘creat[ing] an additional benefit’ not in Honeywell’s Plan,” whereas “ERISA’s principal function [is] to ‘protect contractually defined benefits.’” Creating a new benefit is a settlor function, not a fiduciary function. And, ‘[t]o the best of the Secretary’s knowledge, no court in any jurisdiction has blessed the use of fiduciary duties to create a contractual entitlement where none existed.”

• Moreover, as DOL argued in its amicus brief in Hutchins v. HP Inc., there are good (and loyal and prudent) reasons for a fiduciary in these circumstances to allocate forfeitures to reduce employer contributions:

• [Where] a plan administrator resolutely uses forfeitures to pay administrative costs rather than the sponsor’s outstanding matching contributions …, the sponsor would be asked to provide more of its funds to the plan …. If the sponsor refused – which, because plan funding is a settlor decision, it can – the plan would have a funding shortfall, and the plan administrator would have to decide whether to take action against the sponsor to collect the shortfall…. That decision would require the fiduciary to evaluate the context, risks, and benefits again. … For instance, any ensuing legal claims the fiduciary would bring to address the shortfall would devour more plan assets, potentially further imperiling participants.

• Alternatively, where a fiduciary does not apply forfeitures to reduce sponsor contributions, “a plan sponsor may choose a less litigious, but nonetheless participant-detrimental, option. If forfeitures don’t offset contributions, the sponsor is within its rights to amend the plan and simply reduce the amount it will match going forward.”

• Finally, ruling for plaintiffs would be bad policy: it would “limit the flexibility of employers, and discourage them, in creating retirement plans for their employees.”

* * *

It’s good news for plan sponsors that DOL is siding with them and advocating aggressively for sponsor fiduciaries in forfeiture litigation.

We will continue to follow this issue.