A group of employees has filed a federal class action lawsuit against US Foods Inc., alleging the food distribution company violated retirement plan regulations by improperly handling millions of dollars in 401(k) forfeitures.
The lawsuit, filed Thursday in the Northern District of Illinois, centers on how the company managed retirement plan forfeitures—funds left behind when employees depart before their employer contributions fully vest. According to the 29-page complaint, US Foods allegedly used these forfeitures to reduce its own financial obligations rather than following the plan’s written guidelines.
The Employee Retirement Income Security Act of 1974 requires all retirement plans to maintain a written document outlining how plan assets must be managed. The plaintiffs argue that US Foods’ retirement plan document establishes a clear hierarchy for using forfeitures: they must first be applied to reduce plan expenses, and only after those expenses are fully covered can any remaining forfeitures be used to reduce the company’s employer contribution obligations.
However, the employees claim US Foods disregarded this mandate. Between 2020 and 2024, the company allegedly used at least $13,685,000 in forfeitures to reduce its employer contribution obligations, while the plan simultaneously reported at least $7,331,000 in expenses that should have been paid first using those same forfeitures.
The complaint describes the plan document as “the plan rulebook” that “binds the fiduciaries who administer the plan, controls the use of plan assets, and protects participants’ rights.” The plaintiffs maintain that any failure to follow this written document constitutes a violation of federal retirement security law.
What makes the situation more complex, according to the lawsuit, is US Foods’ alleged attempt to retroactively legitimize its actions. The company has a documented history of amending its retirement plan over the years, adjusting various features including hardship withdrawal rules, contribution limits, vesting-service rules, compensation definitions, profit-sharing contributions, and distribution options. None of these amendments addressed the use of forfeitures until 2024.
In 2024, US Foods adopted Amendment Eight to the plan document. This amendment stated that forfeitures would retain their character as employer contributions and be applied as credits against future employer contributions unless the company elected to pay employer contributions without offset. Critically, the company claimed this amendment was retroactive to January 1, 2019, covering the period during which the alleged misuse occurred.
The plaintiffs argue this retroactive amendment represents an admission of wrongdoing rather than a legitimate correction. They characterize the backdating as “evidence of the breach and improper fiduciary conduct,” asserting that US Foods knew its actions violated both federal law and its own plan document, prompting the attempted retroactive change to avoid liability.
The lawsuit seeks to represent all participants and beneficiaries of the US Foods retirement plan affected by the alleged misuse of forfeitures. The plaintiffs are pursuing remedies under the Employee Retirement Income Security Act for what they describe as a breach of fiduciary duty.
US Foods Inc. has declined to comment on the pending litigation. The case highlights ongoing concerns about retirement plan administration and the responsibilities of employers as fiduciaries of employee retirement funds.
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