What Corporate Lawyers Know About 401(k)s That Most Investors Don’t

Your employer’s 401(k) plan has a legal document that tells you exactly what you’re paying in fees, who the plan fiduciaries are, and what investment options must be offered. Most participants never read it, but corporate attorneys who specialize in ERISA benefits law read it as routine, and what they find often changes how they manage their own retirement assets.

The Fee Disclosure You Are Legally Entitled To

Under ERISA Section 404(a)(5), your plan administrator must send you a fee disclosure at least annually. It lists every investment option, its expense ratio, and any administrative fees charged to your account. Benefits lawyers read it like a contract, because that is essentially what it is.

The gap between a well-priced plan and a poorly priced one is real at scale. A fund with a 1% annual expense ratio carries meaningfully higher costs than an index fund with a 0.1% expense ratio, starting from the same balance. On a $1.5 million portfolio, the difference between a 0.9% annual drag and a 0.05% drag compounds into a number that rivals a year’s worth of contributions. Your 404(a)(5) disclosure tells you which situation you are in.

The Employer Protection Clause That Works Against You

Ultimately, ERISA Section 404(c) is the provision most participants never hear about. When an employer structures a plan to comply with 404(c), they are largely shielded from liability for investment losses resulting from participant decisions. If you chose the fund and it lost money, the employer is generally off the hook.

The catch is that 404(c) protection comes with conditions, as the plan must offer diversified investment options, provide participants with sufficient information to make informed decisions, and allow investment changes at a reasonable frequency. The plan must notify participants that it is intended to comply with 404(c) and that fiduciaries may be relieved of liability for losses from participant decisions. Many employers claim 404(c) protection without fully meeting all disclosure conditions. A participant who knows this can use it as leverage.

What ERISA Gives You the Right to Pursue

ERISA gives plan participants legal standing to sue employers for excessive fees. For example, Boeing settled a 401(k) fiduciary lawsuit for $57 million after participants alleged excessive fees and higher-cost investment offerings. Since 2023, more than 120 class settlements in ERISA excessive fee lawsuits have totaled more than $665 million. In 2025 alone, a near-record 155 fiduciary class lawsuits were filed, with 401(k) plans as the most frequent target, primarily alleging excessive recordkeeping and investment fees.

The first step requires only a publicly available government filing.

The Public Document Almost Nobody Pulls

Another consideration is that DOL Form 5500 is publicly available and reveals your employer’s plan fees. Every employer-sponsored retirement plan with more than 100 participants must file its annual report with the Department of Labor. It discloses total plan assets, service provider fees, and the names of every party receiving compensation from the plan. The DOL’s EFAST2 database at dol.gov makes these filings searchable by company name.

Look at Schedule C, which lists service provider compensation. If your recordkeeper is receiving revenue sharing from fund companies in addition to direct fees, it shows up here. It is the same analysis a plaintiff attorney runs before deciding whether a case is worth filing.

The Tax Cascade That Amplifies Every Dollar

Fee awareness matters even more when you account for how withdrawals interact with Medicare costs. Traditional 401(k) distributions count as ordinary income. For 2026, IRMAA surcharges begin when a single filer’s income exceeds $109,000. At that first tier, your Medicare Part B premium jumps from $202.90 per month to $284.10. At the highest bracket, it reaches $689.90 per month. The SSA uses a two-year lookback, meaning a large Roth conversion or RMD in 2026 affects your 2028 Medicare premiums. A plan with bloated fees that forces faster drawdowns can quietly push you across an IRMAA threshold year after year.

Three Actions Worth Taking Now

1. Pull your employer’s Form 5500 from the DOL’s EFAST2 database and review Schedule C. Compare total service provider compensation against your plan’s assets. If fees exceed 1% of plan assets annually, you have strong grounds to formally alert the plan’s fiduciaries, as they have a continuous legal duty under ERISA to monitor and minimize costs.
2. Read the 404(a)(5) fee disclosure that your plan administrator must send each year. Identify every fund with an expense ratio above 0.5% and check whether a lower-cost equivalent exists in the same plan. If your plan offers no index fund options below 0.3%, document that in writing to your HR department. That paper trail is critical for establishing that fiduciaries were notified of high costs.
3. If your combined income is within $20,000 of the first IRMAA threshold of $109,000 for single filers, fee and withdrawal planning alone justifies a session with a fee-only advisor. The combined Part B and Part D surcharge for 2026 exceeds $95 per month, and because of the two-year lookback, the decisions you make in 2026 are already setting your 2028 healthcare budget.