In a major win for Wells Fargo, a Minnesota federal judge has thrown out a proposed class action ERISA lawsuit that accused the banking giant of misusing forfeited 401(k) funds—ruling the plaintiff lacked standing and failed to show personal harm.
U.S. District Judge John R. Tunheim issued the decisive ruling Wednesday, granting Wells Fargo & Co.’s motion to dismiss the lawsuit brought by former employee Thomas Matula Jr., who claimed the company improperly diverted unvested employee contributions to cover its own 401(k) obligations rather than plan expenses.
The case had been closely watched in legal and employee benefit circles, with some viewing it as a potential catalyst for broader scrutiny of employer control over retirement assets.
The $2.2 Million Question: Who Benefits from Forfeited Funds?
Matula’s lawsuit, filed in June 2024, alleged that when employees left the company before fully vesting, Wells Fargo repurposed their forfeited 401(k) contributions—amounting to $2.2 million in 2022 alone—to offset its own contributions instead of covering plan-related expenses, in alleged violation of fiduciary duties under the Employee Retirement Income Security Act (ERISA).
But Judge Tunheim pushed back, stating the 401(k) plan’s language doesn’t obligate Wells Fargo to fund elective or optional services, like certain participant-selected investments. Instead, the court held that the forfeited funds can only be used for necessary administrative expenses, which the company already pays for.
“Matula cannot have been injured by Wells Fargo’s alleged failure to use forfeited funds to pay for optional services,” the judge concluded.
