A class action complaint over the Clorox’s handling of forfeitures in their 401(k) plan was mostly dismissed.
The plaintiff would need to file a revised complaint, to support that Clorox committed fiduciary imprudence or disloyalty.
The plaintiff claimed that Clorox’s use of reallocating forfeited contributions to reduce contributions effectively used plan assets to offset the company’s expenses, which he argued was improper under the ERISA. Clorox in its motion to dismiss, claims that redirecting forfeitures within the plan is allowed.
ERISA’s anti-inurement provision mandates that plan assets solely benefit participants or cover plan costs. The judge in this case noted that incidental benefits to employers don’t violate this rule.
