Employee May Recover Under ERISA Value of Wrongfully Withheld 401(k) Contributions Plus The Amount They Would Have Grown

Many individuals have 401(k) accounts through their employment and their employer contributes also to their account.  But what can an employee do if their employer does not make the contributions they have promised?  This question was answered in Leister v. Dovetail, Inc., Nos. 07-2242, 07-3615, 07-3671 (7th Cir. October 23, 2008).  Leister was employed by Dovetail and, after a few years employment, discovered that Dovetail had not made its matching contributions to her 401(k) account.  She brought suit to recover the value of these withheld contributions.  The court ruled that Leister was entitled to recover the unpaid contributions together with a reasonable estimate of how those contributions, had they been made, would have grown.  The court added that this calculation should also consider that the benefits would not have been taxable until withdrawn; therefore, the court directed that the valuation of the account should include this tax benefit minus the cost of the future tax liability discounted to present value. 

Robert L. Abell
www.RobertAbellLaw.com