Wow. Season 4 of The Lincoln Lawyer. I binge-watched it and man, it is good. The script, the acting, the discreet product placements? The entire show works. At the heart of this season is a silly case being brought against someone who has done nothing wrong. Countless hours and taxpayer dollars are spent as the wheels of justice slowly grind on.
It is against that backdrop that my non-lawyer mind read the Department of Labor (DOL) amicus brief in the Barragan v. Honeywell forfeiture case. What does it mean for plan sponsors? What does the brief offer as a practical perspective on litigation trends and when forfeiture lawsuits are truly meritorious?
1. The Core Issue in the Amicus Brief
The brief, filed by the U.S. Secretary of Labor in the Third Circuit on January 30, 2026, supports affirming dismissal of the plaintiff’s claim that the plan fiduciaries breached their duties by the way forfeited employer contributions were used. The plaintiff argued that any use of forfeitures other than to pay plan administrative expenses constitutes a fiduciary breach under ERISA. The DOL rejects that argument, framing it as a per se “ends-over-means” liability theory that should not survive a Rule 12(b)(6) motion to dismiss.
The brief explains that:
• ERISA allows employers to create plans and to define options for how forfeited employer contributions may be used — such decisions are settlor functions, not fiduciary decisions.
• Once a plan is created, fiduciaries must administer it prudently and loyally, but this context-specific standard focuses on the process and adherence to the plan document, not imposing a rule that forfeitures must always be used to pay expenses.
• The plaintiff did not allege that any participant lost benefits because of Honeywell’s forfeiture use, which undermines the claim of fiduciary harm.
In short, the DOL’s position is that a fiduciary’s use of forfeited funds in a manner permitted by the plan does not automatically violate ERISA, and binding decisions should be grounded in traditional fiduciary duty analysis rather than broad, results-oriented theories.
2. DOL’s Fiduciary Policy and Litigation Context
This filing echoes the Department’s earlier amicus brief in Hutchins v. HP in the Ninth Circuit, where it similarly argued that allowing forfeitures to offset employer contributions rather than paying expenses has been long accepted and is not inherently a breach.
Hundreds of forfeiture lawsuits have been filed recently (over 40 in 2025 alone), challenging long-standing plan practices and IRS guidance. Many have been dismissed early; a subset survives motions to dismiss or proceeds on appeal.
The DOL’s briefs are not binding on courts, but they articulate a strong regulatory view that reinforces common practice and should influence outcomes favorably for sponsors.
3. Practical Takeaways for Plan Sponsors
From a fiduciary risk management standpoint:
• Plan documents matter more than ever. The clear authorization of forfeiture uses in the document and consistent administration aligned with that language are the best defenses. What has always bugged me about forfeiture cases is that in the micro and small-plan market, retirement plans are created from template plan documents and Sponsors have no choice (that I have seen) over the forfeiture section of the plan document. The document states the three permissible uses of forfeiture money but does not specify an order of use. If there is no order of use and one option is not shown to preferable to another, how can the Sponsor be "hung out to dry" when they choose one of the three forfeiture options over the other two?
• Fiduciary process matters — documenting how decisions are made, showing reasoned exercise of discretion and consistency with the document is critical if litigation arises.
• DOL support reduces but doesn’t eliminate risk — courts maintain ultimate authority, and some judges have allowed fiduciary claims to proceed when specific facts suggest imprudence or disloyalty.
4. Frivolous Forfeiture Lawsuits vs Real Justice
While a portion of the recent filings seem driven by novel legal theories, not actual harm, plan sponsors face real costs and distraction when defending them. Many lawsuits pivot on the idea that plan sponsors must always use forfeitures to reduce participant expenses — a position courts have often rejected as overly broad and inconsistent with ERISA’s text.
However, not all claims are frivolous. Proper fiduciary oversight does require that:
• Decisions are made in participants’ exclusive financial interests, and
• The process, including consideration of alternatives, is prudent and well documented.
Where evidence shows decision-making was arbitrary, lacked reasoned analysis, or diverged from the plan terms in a way that disadvantages participants, claims can be more than mere litigation gambits. The difference often lies in facts, not legal theories.
The Parting Glass
For plan sponsors, the DOL’s brief affirms that using plan forfeitures in ways permitted by the plan is not inherently a fiduciary breach. The trend of dismissals underscores that most forfeiture challenges stretch the law beyond its historical bounds. Sponsors should maintain well-drafted plan documents, follow clear fiduciary processes, and document decisions carefully — avoiding the perception that funds were used to favor the employer at participants’ expense.