Amazon Accused of Mismanaging 401(k) Forfeiture Funds

Amazon.com Inc. and its 401(k) administrative committee are facing a class-action lawsuit alleging improper handling of forfeited retirement plan assets. Filed in the U.S. District Court for the Western District of Washington, the lawsuit claims Amazon misused millions in forfeited employee funds between 2018 and 2023 by applying them toward future company contributions rather than reducing administrative fees or redistributing them to participants.

The complaint, led by plaintiff Cory Curtis and represented by Terrell Marshall Law Group PLC, argues that Amazon’s actions amounted to self-dealing, ultimately benefiting the company at employees' expense. Amazon’s 401(k) plan, one of the country’s largest, holds over $17 billion in assets and serves more than 1.3 million participants. The lawsuit contends that while Amazon’s plan agreement allows forfeited funds to be used for administrative costs, participant allocations, or employer contributions, the company primarily used them to offset its own obligations.  

This case is part of a broader trend of litigation over 401(k) forfeitures, with more than 30 similar lawsuits filed against major corporations like Qualcomm, HP, and Honeywell since 2023. While some courts have ruled in favor of employers, legal experts remain divided on the implications. Critics argue these cases attempt to exploit ERISA regulations, while others say they highlight a lack of clarity in fiduciary responsibilities.  

Amazon has denied any wrongdoing, with spokesperson Montana MacLachlan stating that the company believes the allegations are without merit. The lawsuit seeks to force Amazon to return any gains from the disputed funds, remove fiduciaries deemed responsible, and implement corrective measures.  

As the case moves forward, it could shape future fiduciary practices and regulatory oversight on how companies handle 401(k) forfeitures, potentially influencing retirement plan management across the industry.