In this guide10 sections
Under ERISA, the people who run your employer’s retirement or benefit plan are fiduciaries, and federal law requires them to act solely in your interest, manage plan money prudently, keep costs reasonable and follow the plan’s rules. If they breach those duties, for example by keeping overpriced funds in a 401(k) or using plan money for the company’s benefit, they can be personally liable to restore the losses. Participants can sue on behalf of the plan, but strict deadlines apply.
Key takeaways
- Anyone with discretionary control over a plan’s management, administration or assets is a fiduciary, whatever their title (29 U.S.C. §1002(21)(A)).
- Fiduciaries owe duties of loyalty and prudence, must diversify investments and must follow plan documents that comply with ERISA (29 U.S.C. §1104).
- A fiduciary who breaches these duties is personally liable to make good the plan’s losses and return any profits (29 U.S.C. §1109).
- Fiduciary breach suits generally must be filed within six years of the breach, or three years after you actually learned of it, whichever is earlier (29 U.S.C. §1113).
Who counts as a fiduciary
ERISA defines fiduciaries by what they do, not their job title. You are a fiduciary to the extent you exercise discretionary authority over the plan’s management, any authority or control over its assets, give investment advice for a fee, or have discretionary responsibility for administering the plan. Depending on the plan, that can include:
- The employer or a benefits committee that picks the plan’s investment menu
- Trustees who hold plan assets
- Plan administrators who decide claims
- Investment managers and paid advisers to the plan
Not everyone who works on a plan is a fiduciary. A recordkeeper or payroll vendor that only follows instructions usually is not. ERISA covers most private-sector plans but generally not government or church plans; see our overview of what ERISA covers.
The four core duties
| Duty | What it requires | Example of a breach |
|---|---|---|
| Loyalty (exclusive purpose) | Act solely for participants, to provide benefits and pay reasonable plan expenses | Choosing funds because they benefit the employer’s business partner |
| Prudence | Act with the care, skill and diligence of a knowledgeable person, judged by the facts at the time | Never comparing fees or reviewing fund performance |
| Diversification | Spread investments to minimize the risk of large losses, unless clearly prudent not to | Putting most pension assets into one risky investment |
| Following plan documents | Administer the plan by its terms, as long as they comply with ERISA | Ignoring the plan’s eligibility or vesting rules |
ERISA also bans certain prohibited transactions. A fiduciary generally may not cause the plan to buy, sell, lend or provide services with a “party in interest,” such as the employer or a service provider, unless an exemption applies, and may not deal with plan assets for its own benefit or take personal payments in connection with plan transactions (29 U.S.C. §1106).
Excessive 401(k) fees
Fees are one of the most common sources of fiduciary claims. Fiduciaries do not have to pick the cheapest options, but they must use a prudent process to make sure fees are reasonable for the services provided. The U.S. Supreme Court has held that fiduciaries have a continuing duty to monitor plan investments and remove imprudent ones (2015), and that offering some low-cost choices does not excuse keeping imprudent, high-cost ones on the menu (2022). In 2025, the Court also made it easier for participants to plead prohibited transaction claims involving plan service providers.
Small differences add up. Example (hypothetical): Teresa has $80,000 in her 401(k). Her plan offers a retail share class of an index fund costing 0.75% a year, while an otherwise identical institutional share class costs 0.10%. That gap is $520 in the first year alone, and it compounds over decades.
Federal rules require 401(k)-type plans that let you choose investments to give you fee information, including each fund’s expense ratio, at least annually, plus quarterly statements of fees actually charged to your account (29 CFR §2550.404a-5). Those disclosures are the starting point for spotting a problem.
Other common breaches
- Late deposit of your contributions: holding back payroll deductions instead of putting them in the plan.
- Poor monitoring: keeping funds that badly underperform comparable options for years without review.
- Conflicts of interest: using the employer’s own funds or affiliates without a prudent, documented process.
- Misleading participants: giving materially false information about benefits.
- Mishandling claims: ignoring plan terms when deciding benefits. Denied disability benefits are covered in our guide to appealing a long-term disability denial.
What you can recover
ERISA §502 lets participants, beneficiaries and fiduciaries bring a civil action for relief under §409 (29 U.S.C. §§1109, 1132(a)(2)). A court may order a breaching fiduciary to:
- Restore losses the plan suffered from the breach
- Give up profits made by using plan assets
- Be removed, or accept other equitable or remedial relief
Participants may also seek an order stopping a violation or other appropriate equitable relief under §502(a)(3). The court may award reasonable attorney’s fees and costs to either side. Because many participants are affected the same way, fee and investment cases are often brought as class actions. Learn more about class actions.
Deadlines
| Situation | Deadline to sue |
|---|---|
| General rule | 6 years after the last act that was part of the breach (or the last date an omission could have been cured) |
| You had actual knowledge of the breach | 3 years after you first had actual knowledge, if earlier |
| Fraud or concealment | Up to 6 years after discovery |
Fiduciary breach claims must be filed in federal court. These deadlines are set by 29 U.S.C. §1113.
Steps to take if you suspect a problem
- Collect your disclosures: the annual fee notice, quarterly statements and the summary plan description.
- Request plan documents in writing: the plan document, trust agreement and latest annual report. If the administrator does not provide requested documents within 30 days, a court may impose up to $110 a day.
- Compare your funds: note expense ratios and whether cheaper share classes of the same funds exist.
- Check deposit timing: compare paycheck deductions with the dates contributions reached your account.
- Get help: the Department of Labor’s Employee Benefits Security Administration has benefits advisors at (866) 444-3272, and a lawyer can review whether a claim exists.
ERISA §510 also bars your employer from firing or disciplining you for exercising your plan rights or providing information in an ERISA inquiry. See our ERISA page for the kinds of benefit disputes we review.
Frequently asked questions
Is my employer a fiduciary just because it sponsors the plan?
Not automatically. It becomes a fiduciary to the extent it controls the plan’s management, assets or administration, such as choosing investments or appointing the committee that does.
If I picked my own funds, can I still bring a claim?
Generally you cannot blame fiduciaries for your own choices among the menu, but fiduciaries remain responsible for choosing and monitoring the menu itself.
Do I have to prove my account lost money?
You generally need to show the breach caused losses to the plan, such as excess fees paid or returns lost compared with prudent alternatives.
Can I bring a claim after I leave the company?
Often yes, if you were a participant when the breach occurred, but check the six-year and three-year deadlines.
Does it cost money to ask for plan documents?
The plan may charge a reasonable copying fee for some documents, but your SPD and the required fee disclosures must be provided to you.
Talk to a California employment lawyer
Employees First Labor Law represents workers exclusively. If you are concerned about high fees, late deposits or mismanagement in your employer’s plan, we offer free virtual consultations. Contact us or call (310) 853-3461.
This article is general information about California law as of 2026, not legal advice for your situation. Reading it does not create an attorney-client relationship.
