Intuit Gets Nod for One of First 401(k) Forfeiture Settlement

Intuit Inc.'s class settlement of nearly $2 million received initial court approval, paving the way for resolution of a legal challenge to how the technology company handles forfeited contributions in its 401(k) plan.

The deal marks one of the first significant settlements in the recent series of cases challenging how dozens of large employers handle the unvested retirement contributions that can be forfeited when workers leave their positions after a short period.

The cases, which have garnered more early wins for employers and drawn opposition from the US Labor Department, say companies violate federal benefits law when they use forfeitures to satisfy their own contribution obligations instead of using them to reduce workers’ expenses.

The Intuit settlement of $1.995 million represents about 63% of the 401(k) administrative expenses that Intuit workers say could have been paid with forfeitures, and it represents about 13% of the total potential damages alleged by the lawsuit, according to court filings. More than 32,000 people covered by the Intuit plan between January 2018 and December 2021 stand to benefit from the agreement.

Judge P. Casey Pitts granted preliminary approval to the deal and scheduled a Nov. 13 fairness hearing in an order issued Tuesday in the US District Court for the Northern District of California. Pitts ruled in 2024 that the case was viable, concluding that the company acted as an Employee Retirement Income Security Act fiduciary by exercising discretion over plan assets and potentially violated a plan term allowing forfeitures to be used only for certain types of contributions.

Groom Law Group, Trucker Huss APC, and Covington & Burling LLP represent Intuit. Hayes Pawlenko LLP represents the plaintiff.

The case is Rodriguez v. Intuit Inc., N.D. Cal., No. 5:23-cv-05053, 7/15/25.