One concession from the plaintiff's own lawyer ended the case – benefits teams should still watch
Wells Fargo has fended off a class action over how it spends forfeited 401(k) match dollars, and benefits leaders should take note.
In a decision dated May 12, 2026, the US Court of Appeals for the Eighth Circuit affirmed the dismissal of a lawsuit brought by Thomas O. Matula, Jr., a Wells Fargo employee. Matula sued the bank along with the Human Resources Committee of its board and its Employee Benefits Review Committee. He argued the company's choice to use forfeited matching contributions to offset its own employer contributions breached fiduciary duties under the Employee Retirement Income Security Act, the federal law that governs workplace retirement plans.
The math behind the dispute is simple. Wells Fargo matches up to six percent of what employees put into their 401(k) accounts. Worker contributions vest right away. The company match vests over three years. Employees who leave before that three-year mark forfeit any unvested match dollars back to the plan. In 2022 alone, those forfeitures added up to roughly $2 million.
Under the plan rules, Wells Fargo had sole discretion to do one of three things with the forfeited money: offset its own contributions, pay plan expenses, or make corrective adjustments to accounts. It picked offset, reducing what comes out of the company treasury to meet its match obligations.
Matula filed his class action on June 11, 2024. He argued the offset choice hurt participants. The district court tossed the case with prejudice, finding he lacked Article III standing – the constitutional rule that a plaintiff has to show a concrete personal injury to sue in federal court.
The Eighth Circuit agreed there was no standing, but got there a different way. Writing for the panel, Circuit Judge Gruender pointed to a concession Matula's lawyer made at oral argument. According to the decision, counsel acknowledged the complaint identified only plan-level harms, conceded no harm to Matula himself had been pleaded, and admitted the complaint did not identify any specific expenses Matula paid that could have been offset with forfeited funds. That admission sank the case. Without an injury to his own account, Matula could not move forward.
The court did hand Matula one win. Dismissals for lack of subject matter jurisdiction generally cannot be issued with prejudice, the panel said, and nothing in this case justified the harsher version. The Eighth Circuit sent the matter back so the district court can enter the dismissal without prejudice.
The amici lineup signals how much weight the wider employer community is putting on these cases. The Chamber of Commerce of the United States of America, The ERISA Industry Committee, and the National Retail Federation all backed Wells Fargo. The presence of three major employer-side groups suggests plan sponsors see real stakes in how courts handle forfeiture-use challenges.
For HR and benefits teams, the lesson is narrow but useful. The Eighth Circuit did not bless Wells Fargo's interpretation of its plan rules on the merits. The court said only that this particular plaintiff failed to plead a personal injury. The bigger question – whether using forfeitures to offset employer contributions can ever be successfully challenged under ERISA – stays open in this circuit.
Because the dismissal is now without prejudice, Matula could try again with a sharper theory of individual harm. Benefits administrators using forfeitures the same way should keep plan documents tight, document how discretion is exercised, and watch for the next plaintiff who arrives with a more carefully pleaded injury.
