Bank of America Defends 401(k) Plan From Forfeiture Use Claims

Bank of America Corp. defended how it handles forfeited money in its 401(k) plan, saying a recent lawsuit challenging its practices is a doomed attempt to upend decades of settled law and regulatory guidance.

The bank’s practice of distributing 401(k) forfeitures to other participant accounts and thereby reducing its contribution obligations is both required by the plan’s terms and consistent with established law, the bank said in a motion to dismiss filed Wednesday in the US District Court for the Western District of North Carolina at Charlotte.

According to the bank, its 401(k) plan allows forfeitures to be used for ...