401(k) fee lawsuits · California ERISA lawyersThe law says your 401(k)’s fees must be reasonable. Are they?
The people who run your 401(k) are fiduciaries. Federal law requires them to act solely for you and the other participants, to choose and keep watching the plan’s investments with care, and to spend plan money only on benefits and reasonable expenses. When excessive fees or imprudent investments drain the plan, the law lets participants sue to put the money back.
- § 404The duties: loyalty and prudence
- § 409A breaching fiduciary makes the plan whole
- § 502(a)(2)Participants can sue for the plan
What a fraction of a percent costs
Move the fee. Watch the gap.
The U.S. Department of Labor’s own example is loaded: $25,000, 35 years, and one extra percentage point in fees. Drag the sliders to try your own numbers.
Shown: the Department of Labor’s example. $25,000 today, nothing added, 35 years, and fees of 0.50% versus 1.50% a year (an extra 1.00%, or $10 more per $1,000 invested, every year).
- Plan A · 0.50% fees
- $226,556
- Plan B · 1.50% fees
- $162,846
- The quiet fraction costs
- $63,71028.1% less at retirement, from the same savings and the same investments.
AssumptionsA 7% average yearly return before fees. Plan A pays 0.50% a year in fees; Plan B pays the same plus the extra fee, so its return is lower by exactly that amount. Returns compound once a year; yearly additions arrive at the end of each year. No taxes, inflation, employer match or withdrawals. A teaching example, not a prediction, and not a statement about any employer’s plan.
SourceU.S. Department of Labor, “A Look at 401(k) Plan Fees” (Sept. 2019): $25,000 with 35 years to retirement, 7% average returns, fees of 0.5% versus 1.5%, no further contributions. The DOL rounds the results to $227,000 and $163,000 and says the 1 percent difference reduces the balance by 28 percent.
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Free Case ReviewWhat makes a fee excessive
Five ways a plan can overpay with your money
A high fee is not automatically illegal. A careless process can be.ERISA does not set a maximum fee. It requires the plan’s fiduciaries to act prudently and solely in participants’ interest, and to use plan money only to provide benefits and pay reasonable expenses. A fee case asks two questions: did the plan pay more than the services and investments were worth, and did the people in charge follow a careful process to find out?
ERISA § 404(a)(1)(A)–(B), 29 U.S.C. § 1104(a)(1)(A)–(B)-
Recordkeeping fees above what the work is worth
Every 401(k) pays a recordkeeper to track accounts, process paperwork, run the website and send statements. Some or all of that cost can come out of participants’ accounts. The price for similar services can differ from one plan to the next.
What a case asksDid the fiduciaries check what comparable plans pay, for example by asking several providers for bids, and act on what they learned? Counting every source of payment, was the total reasonable?
ERISA § 404(a)(1)(A)(ii): plan money is for “defraying reasonable expenses of administering the plan.” -
An expensive share class of the very same fund
Many mutual funds are sold in several share classes: the same portfolio and the same managers at different prices. A retail class is generally priced for individual investors. A plan with a large amount invested may qualify for a cheaper institutional class.
What a case asksDid the plan keep a higher-priced class when a lower-priced class of the identical fund was available to it?
ERISA § 404(a)(1)(B), 29 U.S.C. § 1104(a)(1)(B) -
Costly active funds when index alternatives were there
An actively managed fund pays managers to pick investments and generally charges more than an index fund that simply tracks a market. Paying for active management is not wrong in itself. The question is whether the fiduciaries weighed the extra cost against what participants were getting for it.
What a case asksDid the fund’s cost and results hold up against a meaningful benchmark, meaning similar options the plan could have chosen? In California’s federal courts, a claim that an investment underperformed generally has to point to one. The Supreme Court heard a case on that question in October 2026.
ERISA § 404(a)(1)(B), 29 U.S.C. § 1104(a)(1)(B) -
Revenue sharing that hides the true cost
Part of what a fund charges through its expense ratio can be passed along to the plan’s recordkeeper or other service providers. That is revenue sharing. It is not illegal in itself, but it makes the real cost of running the plan harder to see. Because it is a percentage of assets, it can grow as balances grow even when the work does not.
What a case asksDid the fiduciaries know everything their providers were paid, from every source, and was that total reasonable for the services?
29 C.F.R. § 2550.404a-5(c)(2)(ii)(C): your quarterly statement must say when some expenses were paid this way. -
A failure to keep watching
Choosing the investment menu is not the end of the job. The Supreme Court has said fiduciaries have a continuing duty to monitor a plan’s investments and remove imprudent ones. Letting participants pick their own funds does not excuse keeping imprudent options on the menu.
What a case asksDid a committee meet, review fees and performance, and act on what it found? Or did the same funds and the same contracts sit untouched for years?
ERISA § 404(a)(1)(B) · U.S. Supreme Court, 575 U.S. 523 (2015); 595 U.S. 170 (2022)
Who is a fiduciary?
Generally, anyone who exercises discretionary authority or control over managing the plan or its money, or has discretionary responsibility for running it. That often means a benefits or investment committee, and sometimes the company itself. A fiduciary who breaches these duties is personally liable to restore the plan’s losses.
ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A) · ERISA § 409, 29 U.S.C. § 1109(a)Read the fine print
Where fees hide
Five lines on a sample plan statement, read in plain English.
The chart above shows what fees can cost. This shows where to find them on your own paperwork: your plan’s fee disclosure and quarterly statement.
Each numbered mark on the sample document matches a numbered note.
Sample document — not any real planIllustrative figures
Sample documentNot any real plan
Example Co. Retirement Savings Plan
Fee Disclosure & Quarterly Statement
I Your account this quarter
- Beginning balance48,200.00
- Your contributions1,950.00
- Employer contributions975.00
- Investment gain (loss)1,312.40
- Fees and expenses deducted (see Part II)(41.25)
- Ending balance52,396.15
II Fees and expenses charged to your account
- Plan administrative expenses
- 1Recordkeeping & administrative services(22.50)
- Legal, audit & trustee services(6.25)
- Individual expenses
- Loan maintenance fee(12.50)
- Total charged this quarter(41.25)
2In addition, some of the plan’s administrative expenses for the preceding quarter were paid from the total annual operating expenses of one or more of the plan’s investment options (e.g., through revenue sharing arrangements, Rule 12b-1 fees, sub-transfer agent fees).
III Investment comparison chart (excerpt)
| 3Investment option | Share class | Expense ratio | Per $1,000 |
|---|---|---|---|
| Sample U.S. Stock Index Fund | Institutional | 0.04% | $0.40 |
| 4Sample Large-Company Growth Fund | Retail | 0.98% | $9.80 |
| Sample Target Date 2055 Fund | Collective trust | 0.42% | $4.20 |
| Sample Bond Fund | Investor | 0.55% | $5.50 |
| Sample Stable Value Fund | — | 0.36% | $3.60 |
Fees and expenses are only one of several factors to consider when making investment decisions. The cumulative effect of fees and expenses can substantially reduce the growth of your retirement account. Visit the U.S. Department of Labor’s website for an example demonstrating the long-term effect of fees and expenses.
Sample document — not any real plan. Created by Employees First Labor Law for education. Its names and numbers are invented and are not drawn from any employer’s plan.
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Stop 1 of 5
Recordkeeping & administrative fees
On the sample: “Recordkeeping & administrative services … (22.50)”
- In plain English
- The plan pays a company to keep the books: track every account, process paperwork, run the website and send statements. Some or all of that cost can be taken from your account as a dollar charge each quarter.
- Why it matters
- It is charged every quarter for as long as you are in the plan. A fee investigation asks whether what participants paid for these services was reasonable.
- The duty behind it
- Plan fiduciaries must act for the exclusive purpose of providing benefits and “defraying reasonable expenses of administering the plan.”29 U.S.C. § 1104(a)(1)(A)
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Stop 2 of 5
Revenue sharing
On the sample: “… paid from the total annual operating expenses … (e.g., through revenue sharing arrangements …)”
- In plain English
- Not every cost shows up as a dollar line. Part of what a fund charges through its expense ratio can be passed along to pay the plan’s recordkeeper or other service providers. That is revenue sharing.
- Why it matters
- The dollar fee on your statement may not be the whole cost of running the plan. To see the full picture, you look at the dollar charges and at what flows out of the funds.
- The duty behind it
- Federal rules require the quarterly statement to tell you when some administrative expenses were paid this way, and fiduciaries must act solely in participants’ interest.29 C.F.R. § 2550.404a-5(c)(2)(ii)(C) · 29 U.S.C. § 1104(a)(1)
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Stop 3 of 5
Expense ratios
On the sample: the “Expense ratio” column, from 0.04% to 0.98%
- In plain English
- The yearly cost of a fund, as a percentage of the money you have in it. It is not billed to you; it comes out of the fund’s returns, so it never appears as a charge.
- Why it matters
- It is charged on your whole balance, every year. On this sample, every $1,000 costs $0.40 a year in one fund and $9.80 in another.
- The duty behind it
- Fiduciaries must act with prudence. The Supreme Court has said they have “a continuing duty to monitor trust investments and remove imprudent ones.” Even when you pick your own funds, they must independently evaluate what goes on the menu.29 U.S.C. § 1104(a)(1)(B) · U.S. Supreme Court, 575 U.S. 523 (2015); 595 U.S. 170 (2022)
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Stop 4 of 5
Share classes
On the sample: “Sample Large-Company Growth Fund · Retail · 0.98%”
- In plain English
- Many funds are sold in several share classes: the same portfolio and managers at different prices. A retail class is generally priced for individual investors; institutional classes often cost less.
- Why it matters
- One question a fee review asks is whether a plan offered a higher-priced class when a lower-priced class of the same fund was available to it.
- The duty behind it
- In a 2015 case, workers alleged their plan offered higher-priced retail-class funds when institutional classes were available. The Supreme Court did not decide that question; it held that the duty to monitor investments continues over time.U.S. Supreme Court, 575 U.S. 523 (2015)
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Stop 5 of 5
The fine print itself
On the sample: “The cumulative effect of fees and expenses can substantially reduce the growth of your retirement account.”
- In plain English
- That sentence is required. Federal rules make your plan tell you, in writing, that fees add up over time, and point you to a Department of Labor example.
- Why it matters
- In the Labor Department’s own hypothetical, one extra percentage point of fees over 35 years leaves an account about 28% smaller. See it on the chart above.
- The duty behind it
- Plan administrators must give participants this fee information each year and the dollar fees charged each quarter.29 C.F.R. § 2550.404a-5(c), (d)(1)(iv)(A)(5)
Your paperwork
How to find your plan’s fees
The law requires your plan to tell you. Here is where to look.If you choose your own investments in a 401(k), federal rules require the plan administrator to give you its fees in writing: once a year for the plan and its investments, and every quarter for what was actually taken from your account.
Find the annual fee disclosure
You should receive it by the date you can first direct your investments, and then at least once every 14 months. It includes a chart comparing every investment option, with each fund’s expense ratio shown as a percentage and as a dollar cost per $1,000.
29 C.F.R. § 2550.404a-5(c)(1), (d)(1)(iv), (d)(2), (h)Read the fee lines on your statement
At least once a quarter, your statement must show the dollar amount actually charged to your account for administrative and individual expenses, what the charges were for, and a note when some expenses were paid out of the funds’ operating expenses.
29 C.F.R. § 2550.404a-5(c)(2)(ii), (c)(3)(ii)Ask for the plan documents in writing
On written request, the administrator must send the summary plan description, the latest annual report and the contracts and other documents the plan runs under, and may charge a reasonable copying fee. If it does not respond within 30 days, a court may impose a penalty of up to $110 a day, in its discretion.
ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4) · 29 U.S.C. § 1132(c)(1); 29 C.F.R. § 2575.502c-1Bring them to us
A free consultation, with whatever you have. A fee disclosure or a single quarterly statement is enough to start.
Free consultation
Who can bring a fee case
You sue for the plan. The money goes back to the plan.
A fee case is not a claim for your account alone. It is brought on behalf of the plan, and the fiduciaries who breached their duties are asked to make the plan whole.
ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2) · ERISA § 409, 29 U.S.C. § 1109(a)-
A participant brings the claim, for the plan
ERISA lets a participant sue for relief on behalf of the whole plan when its fiduciaries breach their duties.
29 U.S.C. § 1132(a)(2) -
Fiduciaries are asked to make the plan whole
A fiduciary who breaches is personally liable to make good the plan’s losses and to give back any profits made using plan assets.
29 U.S.C. § 1109(a) -
Any recovery returns to the plan
It is then generally divided among participants under the plan or the settlement’s terms, rather than paid to one person.
29 U.S.C. § 1109(a): losses are made good “to such plan”
Who counts as a participant
- Current employees with money in the plan.
- Former employees who still have a balance. ERISA defines a participant to include a former employee who is or may become eligible for benefits. ERISA § 3(7), 29 U.S.C. § 1002(7)
- Beneficiaries, such as a spouse or child who inherited an account.
- If you cashed out or rolled over everything, whether you can still bring a claim depends on the facts and the court. It is one of the first things we check.
Your own account counts. The Supreme Court has said a participant in a 401(k)-type plan can sue over a breach that reduced the plan assets held in that participant’s own account.
U.S. Supreme Court, 552 U.S. 248 (2008)Often a class action, always federal court. Fee cases are often filed as class actions for everyone in the plan. Claims like these can be brought only in federal court.
ERISA § 502(e)(1), 29 U.S.C. § 1132(e)(1)Speaking up is generally protected. It is illegal to fire, discipline or discriminate against you for exercising your rights under the plan or ERISA, or for giving information in an ERISA inquiry or proceeding. ERISA § 510 retaliation.
ERISA § 510, 29 U.S.C. § 1140The deadline
Six years, or three from when you knew
Whichever comes first. Then the claim is generally gone.A fiduciary-breach claim generally must be filed within six years of the last act that was part of the breach, or within three years of the day you first had actual knowledge of it, if that is earlier. If the breach was hidden by fraud or concealment, the limit is six years from discovery.
ERISA § 413, 29 U.S.C. § 1113Hypothetical timeline
If you learn of it in year 2, the deadline is year 5. The three-year limit runs out first.
A teaching example, not legal advice about your deadline. Courts decide when a breach happened and when someone had actual knowledge.
- Actual knowledge
Means real awareness. The Supreme Court held in 2020 that a disclosure you received but never read does not, by itself, start the three-year clock. The six-year limit still runs.
U.S. Supreme Court, 589 U.S. 178 (2020) - A continuing duty
Because the duty to monitor continues, a claim that fiduciaries failed to fix a problem within the last six years can be on time even if the fund was first added to the plan long ago.
U.S. Supreme Court, 575 U.S. 523 (2015) - Do not wait
Each year that passes can push older losses outside the six-year window. The safest time to have a plan reviewed is now.
From documents to recovery
How a 401(k) fee case works
A summary. Every case is different, and fee cases can take years.Workers rarely see the plan committee’s minutes or its consultants’ reports before a case is filed. A fee case is built first from public filings and the disclosures participants receive, and then, if it survives the early motions, from the plan’s own records.
Review of the plan’s paperwork
Fee disclosures, quarterly statements, the plan’s annual reports (Form 5500) and any documents requested from the administrator. We compare fees, share classes and investment results.
A complaint in federal court
Filed on behalf of the plan, often as a proposed class action for everyone in it, against the fiduciaries responsible for the decisions.
The motion to dismiss
The defense typically asks the court to end the case at the start. The complaint has to lay out facts that make a breach plausible. In 2025 the Supreme Court held that workers claiming a prohibited transaction, such as certain dealings between a plan and its service providers, do not have to disprove the law’s exemptions in the complaint.
ERISA § 406(a)(1)(C), 29 U.S.C. § 1106(a)(1)(C)Discovery
The plan’s records come out: committee minutes, consultant reports, bids, contracts and what providers were paid. This is where the fiduciaries’ process is tested.
Class certification
The court decides whether the case can go forward on behalf of everyone in the plan.
Fed. R. Civ. P. 23Settlement or trial, then recovery to the plan
A class settlement needs the court’s approval, and participants get notice and a chance to object. Money recovered goes to the plan and is generally divided among participants under a plan of allocation the court approves.
Fed. R. Civ. P. 23(e) · 29 U.S.C. § 1109(a)
401(k) fee investigations
Is your employer’s plan being investigated?
We are investigating whether participants in these employers’ 401(k) plans were charged excessive fees. If you have, or used to have, money in one of these plans, its page explains what we are looking at and how to reach us.
An investigation is not a lawsuit, and no court has found that any of these employers did anything wrong.
See all 401(k) fee investigations- Caltech401(k) fee investigation
- Automobile Club (AAA)401(k) fee investigation
- HCL America401(k) fee investigation
- Block Inc401(k) fee investigation
- LPL Financial401(k) fee investigation
- City of Hope401(k) fee investigation
Not on the list? The same duties apply to the people who run most private employers’ plans. A free consultation is a good place to start.
Questions
401(k) fee lawsuits, answered plainly
What is a 401(k) fee lawsuit?
It is a case brought under ERISA, the federal law that governs most private employers’ retirement plans, claiming that the people who run a 401(k) breached their duties by letting the plan pay unreasonable fees or keep imprudent investments. The case is brought on behalf of the plan, and any recovery goes back to the plan for participants’ accounts.
ERISA §§ 404, 409, 502(a)(2), 29 U.S.C. §§ 1104, 1109, 1132(a)(2)How do I know if my 401(k) fees are too high?
Start with your plan’s annual fee disclosure, which lists each fund’s expense ratio and its cost per $1,000, and the dollar fees on your quarterly statement. There is no single number that makes a fee illegal. What matters is whether the fees were reasonable for the services and investments, and whether the fiduciaries followed a careful process to keep them that way.
29 C.F.R. § 2550.404a-5I picked my own investments. Can I still have a claim?
Generally, yes. The Supreme Court has said that even when participants choose their own investments, the plan’s fiduciaries must independently evaluate which options belong on the menu and remove imprudent ones. Offering choices does not excuse keeping bad options.
U.S. Supreme Court, 595 U.S. 170 (2022)Would I get the money personally?
Not directly. ERISA treats the loss as a loss to the plan, so a breaching fiduciary must make the plan whole. In a 401(k) case the recovery is then divided among participants’ accounts, usually under a plan of allocation the court approves.
ERISA § 409(a), 29 U.S.C. § 1109(a)I left the company. Can I still be part of a case?
Often, yes. ERISA’s definition of a participant includes former employees who are or may become eligible for benefits, so if you still have money in the plan you generally count. If you rolled over or cashed out everything, it depends on the facts and the court.
ERISA § 3(7), 29 U.S.C. § 1002(7)How long do I have to bring a claim?
Generally six years from the last act that was part of the breach, or three years from when you actually learned of it, if that is sooner. If the breach was hidden by fraud or concealment, six years from discovery. Do not wait: older losses can fall outside the window.
ERISA § 413, 29 U.S.C. § 1113Can my employer retaliate if I raise questions about the plan?
Generally, the law protects you. ERISA makes it illegal to fire, discipline or discriminate against you for exercising your rights under the plan or ERISA, or for giving information or testifying in an ERISA inquiry or proceeding.
ERISA § 510, 29 U.S.C. § 1140Does ERISA cover my plan?
Most retirement plans offered by private employers are covered. Government plans, such as CalPERS and CalSTRS, and most church plans are generally not. Our guide to ERISA explains the basics.
ERISA § 4(b), 29 U.S.C. § 1003(b)What does it cost to talk with you?
The consultation is free. We work on contingency: our fee is a percentage of what we recover for you. How case costs are handled is spelled out in your written fee agreement.
Free consultation
Bring your fee disclosure. We will read it with you.
A quarterly statement, an annual fee notice, a letter from the plan: any one of them is enough to start. Or call (310) 853-3461We work on contingency: our fee is a percentage of what we recover for you. How case costs are handled is spelled out in your written fee agreement.
Attorney advertising.This page is general information, not legal advice. Contacting us does not create an attorney–client relationship.
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