Additionally, Barragan claimed that Honeywell had engaged in prohibited transactions by using the forfeited funds in a way that violated ERISA’s Section 1106(a). The judge dismissed this argument as well, citing the U.S. Supreme Court’s decision in Lockheed Corp. v. Spink, which outlined specific circumstances under which prohibited transactions may occur. Judge Padin found no such circumstances here, as the reallocation of the forfeited funds did not expose the plan to any undue risk of underfunding.
Honeywell’s 401(k) Plan: No Breach Found
The case underscores the complexities of managing employee benefit plans under ERISA, especially when it comes to handling forfeited funds. While Barragan’s claims were dismissed, the ruling provides clarity on how companies like Honeywell can utilize forfeited 401(k) funds as part of their overall retirement plan strategies, as long as the terms are adhered to.
At this time, representatives for Honeywell and Barragan have not responded to requests for comment, leaving the door open for potential further developments in the case.
