On January 30, 2026, the U.S. Department of Labor (DOL) filed an amicus brief in Barragan v. Honeywell Int’l Inc., arguing that plan fiduciaries do not breach their duties by using forfeited employer contributions to reduce future employer contributions, rather than offsetting plan expenses, as long as the plan document gives them discretion. For CFOs and plan committees, this strengthens the defense for one of the most heavily litigated areas in ERISA today, but only when the governance underneath is documented.

What is the Barragan v. Honeywell case about?

The case centers on whether the employer’s plan fiduciary breached its duties by not using forfeited employer contributions to pay plan expenses. The plaintiff argued the forfeitures should have been applied to plan expenses, not used to reduce future employer contributions.

The lower court ruled in favor of Honeywell. The plaintiff appealed to the Third Circuit. The DOL has now filed an amicus brief urging the appeals court to affirm.

Why is the DOL’s position significant?

The DOL stated in its filing that the District Court correctly concluded the plan sponsor did not breach its fiduciary duties of prudence and loyalty. The DOL specifically noted there is no rule barring plan fiduciaries from allocating forfeited employer contributions to reduce future employer contributions, versus having to use those funds to offset administrative costs.

Forfeiture allocation has been a fast-growing area of plaintiff litigation against plan sponsors. The DOL’s amicus brief gives plan sponsors a clearer benchmark for what a defensible allocation decision looks like, and it tells the courts that the DOL does not view this allocation choice itself as a breach.

Does this mean plan sponsors are off the hook?

No. A favorable DOL position does not replace the need for a documented fiduciary process. To rely on this kind of decision-making authority, plan sponsors still need:

  • Plan document language that gives fiduciaries discretion over forfeiture allocation
  • Committee minutes that reflect the decision and the reasoning behind it
  • A documented fiduciary process that shows the decision was made prudently and in the interest of participants

The DOL’s brief specifically noted that the plaintiff offered only a bare allegation that forfeitures were not used to pay plan expenses, when the plan gave fiduciaries discretion over how to allocate those funds. The plan document mattered. The discretion mattered.

What should CFOs and plan committees do now?

Three steps to put the plan in a stronger defensive position:

  1. Review your plan document. Confirm that the forfeiture provisions give fiduciaries clear discretion. Older plan documents sometimes have narrower language than sponsors realize.
  2. Document your committee process. When forfeiture decisions are made, capture the reasoning in committee minutes. Board-ready reporting on this decision is exactly the kind of file the DOL and plaintiffs’ attorneys will look at.
  3. Benchmark your governance. Forfeiture allocation is one of several decisions sitting under your fiduciary umbrella. A documented, repeatable governance framework reduces exposure across the board.

The takeaway

The DOL’s amicus brief is a meaningful development, but it rewards plan sponsors who already run a clear, defensible fiduciary process. If your forfeiture decisions sit inside that process, you’re in a stronger position. If they don’t, this is the moment to fix it, before a complaint forces the question.

To review your forfeiture allocation process or build a documented fiduciary governance framework, contact us.