A federal judge in Northern California stated HP Inc. doesn’t violate the Employee Retirement Income Security Act (ERISA) by using forfeited 401(k) money to pay contributions it’s required to make to the plan, by dismissing a proposed class action.

HP had argued that “settled law expressly allows the use of forfeited amounts to reduce employer contributions,” pointing to two Treasury regulations for that view. In addition, HP cited a “new” proposed Treasury regulation that affirmed the right to use forfeitures to pay administrative expenses, to increase participant benefits, OR to reduce employer contributions.

The judge rejected the plaintiff’s theory that using forfeitures to offset contributions instead of paying administrative expenses is a breach.