Siemens, the global technology and manufacturing company, is now the latest firm accused of misuse of its forfeited retirement funds in its $8.9 billion 401(k) plan, in a class action lawsuit filed in U.S. District Court for the District of New Jersey on August 23.

In Cain v. Siemens Corporation, Jim Cain, a participant in the Siemens retirement plan who is representing participants and beneficiaries, alleges that the company violated the Employee Retirement Income Security Act (ERISA) by using the assets of the plan "in its own interest." Siemens failed in its fiduciary duty by using "forfeited" assets from former employees to offset future contributions rather than to reduce administrative costs for plan participants, according to the suit.

Siemens 401(k) plan included two options on how to use the forfeited funds, according to the complaint:

• Using forfeitures to reduce the company's contributions to the plan: This option "is always in Siemens' best interest, because that option lowers the company's contribution costs," the complaint read, "However, that option might also be in the participants' best interest if there is a risk that Siemens would default on its contribution obligation to the plan."
• Using forfeitures to pay plan expenses: If Siemens was at risk of default on its "contribution obligation to the plan," according to the complaint, this second option "is in the best interest of the plan's participants because that option reduces or eliminates the amounts charged to their individual accounts to cover such expenses."

However, the complaint states, in choosing between the options, Siemens "had a conflict of interest because they stood to benefit financially from choosing the first option and therefore had an incentive to choose the first option over the second option."