A New Jersey federal judge recently sided with Honeywell International, rejecting a proposed class action that accused the aerospace giant of violating federal benefits laws by using forfeited 401(k) funds to offset its retirement plan contributions instead of covering administrative costs. The ruling came after a close examination of the company’s actions and their alignment with the terms of the retirement plan.
Honeywell’s Legal Victory
U.S. District Judge Evelyn Padin granted Honeywell’s motion to dismiss a lawsuit filed by former employee Luciano Barragan under the Employee Retirement Income Security Act (ERISA). The judge ruled that Barragan failed to show any breach of fiduciary duties on Honeywell’s part, noting that the company’s use of forfeited 401(k) funds was in accordance with the plan’s established guidelines.
Judge Padin did offer Barragan a potential lifeline, allowing him 30 days to file an amended complaint if he could address the issues raised in the ruling. This decision marked a significant win for Honeywell, which faced allegations of mishandling millions of dollars in forfeited employee funds.
The Battle Over Forfeited Funds
At the heart of the lawsuit was Barragan’s claim that Honeywell mishandled unvested 401(k) funds left behind by employees who had departed the company. Between 2018 and 2022, Barragan argued, the company used these forfeited funds not to cover the plan’s administrative expenses but to reduce its contributions to the plan. This, according to Barragan, caused participants to miss out on valuable employer contributions, ultimately reducing the plan’s overall value.
