Hutchins sued the information technology company and its plan committee in November. According to the suit, HP’s 401(k) plan is funded through a mix of wage withholdings from plan participants and company contributions deposited into the plan’s trust fund. Participants become fully vested in the company’s contributions after three years.
Allegations Against HP
Hutchins alleged that a prudent, loyal fiduciary would have used the unvested funds from workers who leave before the three-year vesting period to lower plan participants’ expenses, which totaled over $2 million in 2021. Instead, HP used the funds to defray its own contribution costs. He sought to represent a class of all participants and beneficiaries who invested in the plan from Jan. 1, 2019, through the date of judgment, estimating about 30,000 eligible class members.
HP Escapes ‘Novel’ 401(k) Suit over Forfeiture usage : Legal Basis and Decision
In her order, Judge Freeman stated Hutchins was attempting to extend ERISA beyond its bounds, contrary to Congressional and Treasury Department intentions for defined contribution plans. She noted that both entities have said plan forfeitures can be used as HP chose to use them, rendering Hutchins’ claims implausible.
