Plaintiffs accuse UWM of directing unvested employer contributions in the company's 401(k) plan toward future employee contributions, rather than administrative expenses. The class action complaint suggests the money-saving moves by UWM cost workers, whose contributions then covered plan expenses, upward of $1.8 million from their retirement savings. 

UWM matches 50% of the first 3% of its workers' contributions, up to $2,500 per year, according to its latest year-end report. The lawsuit said UWM's 401(k) plan then had 7,231 participants and $149 million in assets under management, placing it within the top 1% of retirement plans nationwide by both number of participants and assets. 

The lender and servicer last week asked a judge to dismiss the Employee Retirement Income Security Act complaint, arguing it isn't obligated to prioritize covering the unspecified plan expenses before future employee contributions. 

The dispute over United Wholesale Mortgage's 401(k) benefits

The unvested employer contributions, or forfeitures, are funds the 401(k) plan picks up when a worker departs before reaching vesting requirements. According to case filings, UWM contributions vest at 20% per year, fully vesting in five years of employment. 

The three named plaintiffs are former senior account executives, staff who work with UWM's broker partners. Two of the employees rolled out of the plans, but the suit doesn't provide further details about their retirement savings. 

The complaint lays out UWM's 401(k) plan management, stating it diverted hundreds of thousands of dollars at the end of each year toward future employer contributions instead of annual plan expenses, which the lawsuit also doesn't describe in detail. There's a lone mention of the firm in 2022 using forfeitures to pay just $4,950 in plan expenses.

The lawsuit also includes a chart purportedly showing workers' potential cumulative compounded losses in the 401(k) plan, including compounding percentages of annual plan returns. The lack of departing employee forfeitures used to pay plan expenses resulted in $1,857,731 in losses for existing 401(k) plan participants between 2019 and 2024, the suit alleges.

"Having never managed a very large 401(k) plan, plaintiffs, and all participants in the plan, lacked actual knowledge of the misuse and misallocation of plan forfeitures," the suit reads.

In its motion to dismiss, UWM emphasized that its plan language says forfeitures "may be used" to pay administrative expenses, but it isn't required to do so. Counsel for the firm say plaintiffs' position conflicts with decades of case law and the U.S. Treasury's own guidance, as recent as 2023, that no forfeiture diversion take precedence over another. 

A spokesperson for UWM declined to comment, while attorneys for both UWM and plaintiffs didn't respond to requests for comment. A federal judge has also not set any hearings in the U.S. District Court for the Eastern District of Michigan 

UWM matched $6.4 million in employee contributions in 2024, according to its 2024 annual report. The company lumps its 401(k) benefits with salaries and commissions in its earnings reports.