Peco Foods Inc. defeated a lawsuit challenging its practice of putting the 401(k) contributions forfeited by departing workers toward the contributions it’s required to make to the plan.
The poultry producer neither violated the terms of its retirement plan nor breached its fiduciary duties of loyalty and prudence under the Employee Retirement Income Security Act, Judge Tom S. Lee said. Peco’s plan document doesn’t unambiguously require that forfeitures be used to lower administrative expenses before being put toward employer contributions, the judge said, and ERISA doesn’t impose “categorical liability” any time a plan fiduciary opts to use forfeitures in this ...