The 401(k) plan’s documents state that “forfeitures shall be applied to either reduce succeeding company contributions by the employers, or pay plan expenses, as determined by the plan Administrator,” according to the lawsuit. The UBS 401(k) plan has more than $9 billion in assets and 32,447 participants, according to its most recent Form 5500.

The investment bank is accused of acting in its own self-interest by using forfeited funds to reduce its employer contributions, as opposed to reallocatingthe funds to pay plan expenses. UBS fiduciaries breached their Employee Retirement Income Security Act duties and should make good on “plan losses,” resulting from such alleged breaches, according to the suit.

Since 2020, “UBS has had sufficient cash and equivalents on hand to satisfy its contribution obligations to the Plan. Nevertheless, throughout that period, Defendants consistently decided to allocate forfeitures solely in their own self-interest and failed to consider the interests of the Plan and its participants,” according to the suit.

This recent spate of forfeiture suits – the “use of defined contribution plan forfeitures — the nonvested portion of a former employee's account balance — to offset employer contributions,” said Gerald L. Maatman, Jr., Duane Morris LLP will continue into 2025.

The onslaught of lawsuits began with a Department of Labor lawsuit against a tech company, which challenged how the plan sponsor used plan forfeitures. The case was settled in 2023, however, the plan terms required using forfeitures to lower plan expenses before using them to reduce employer contributions, according to the DOL's complaint.

Here are some of the plan forfeiture lawsuits that were filed in 2024:

Siemens, the global technology and manufacturing company, was accused of misuse of its forfeited retirement funds in its $8.9 billion 401(k) plan, in a class action lawsuit.

Bank of America was sued by 401(k) plan participants “wrongfully and consistently used forfeited non-invested plan assets for its own benefit, to reduce future employer contributions, rather than for the benefit of Plan participants," according to the lawsuit.

Wells Fargo was sued for violating ERISA and "wrongfully and consistently" misusing $2,020,000 in forfeited 401(k) plan assets for the company's own benefit instead of its participants.

Last week, Intuit agreed to a settlement in its lawsuit that alleged the firm reallocated forfeited funds to the "detriment of the plan and its participants," however, the judge in this case found that using forfeited funds to reduce contributions is not a fiduciary breach.

Related: UnitedHealth now facing a 401(k) class action suit, as employees sue for misuse of forfeited funds

Last month, there were several 401(k) forfeited funds lawsuits involving health care firms. Kaiser Foundation Health Plan’s 401(k) forfeited funds lawsuit was dismissed, however, Cigna employees have filed a class action 401(k) misuse of forfeited funds lawsuits against their employer, and UnitedHealth was hit with two of these 401(k) lawsuits.

What are some best practices for employers to avoid a lawsuit? “If any forfeitures remain, those must be used to pay administrative expenses,” recommends Maatman. Also, be transparent in “communications with participants on the use of forfeitures – including clearly communicating the forfeiture process and how forfeitures are to be used – through the plan document, summary plan description and other plan communications.”