A coalition of groups has asked the U.S. Court of Appeals for the Fourth Circuit to affirm the dismissal of a 401(k) plan forfeiture lawsuit against Northrop Grumman Corp., an aerospace and defense company. The U.S. Chamber of Commerce, the ERISA Industry Committee (ERIC), and the American Benefits Council filed an amicus brief in the case, arguing that dismissal was warranted because federal regulations traditionally have allowed employers to use forfeited 401(k) funds to pay for their plan contributions. The case is Laura Garner v. Northrop Grumman Corporation, Case Number 26-1258, U.S. Court of Appeals for the Fourth Circuit.
In their amicus brief, the groups claim that the U.S. government has sanctioned the practice the plaintiffs complained about in their suit as lawful. More specifically, the U.S. Department of the Treasury has issued regulations and guidance making it clear that the forfeiture allocation practice was permissible under the Employment Retirement Income Security Act (ERISA). Furthermore, the groups pointed to federal tax code regulations allowing employers to use forfeited funds in precisely the manner Northrop Grumman did, even before ERISA was enacted.
The groups flatly stated that if the court allowed this suit to proceed, it would not only disregard the fact that many other courts have dismissed similar cases, but also contravene the Treasury Department’s authorization of the practice. Finally, the groups argued that ERISA does not require fiduciaries to ensure that plan participants and beneficiaries receive more in plan benefits than they are contractually obligated to provide.
Northrop Grumman workers filed their lawsuit in March 2025, claiming that the employer violated its fiduciary duties under ERISA. The workers claim that the employer wrongfully used forfeited 401(k) funds to pay its employer contributions, instead of using them to defray administrative costs borne by plan participants. As a result, workers argue that they would have earned more in retirement savings if they had paid lower plan management fees.
The U.S. Chamber of Commerce, as the largest business organization worldwide, regularly lobbies in favor of free enterprise policies. ERIC is a trade association for employers whose plans are subject to ERISA. The American Benefits Council also advocates for policies to support employer-sponsored benefit plans.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
