Jerry Schlichter, a personal injury lawyer in St. Louis, filed the first 401(k) fee lawsuits in the fall of 2006 against some of the largest firms in the country. Not for fraud. For fees no one told the plan holders they were paying. That move changed the 401(k) market. The problem Schlichter found has not gone away. It has gotten worse, and if you sponsor a plan, your name is on the liability line.

"Set up a 401(k) and let it grow." If you run a business with a retirement plan, or hold a large balance in one, you have heard this line a hundred times. It sounds right. It is not.

Schlichter's cases showed a cost structure that hides in plain sight. A 401(k) does not charge one fee. It stacks at least three.

First: the fund expense ratio. That is the cut the fund company takes each year for running the fund. Second: the recordkeeping fee, the charge for tracking each dollar in each account. At smaller firms, this runs 0.30% to 0.60% per year on its own. Third: revenue-sharing. This is the one almost no one sees. Fund companies pay the recordkeeper a slice of their own fees as indirect payment. Revenue-sharing never appears on an invoice. It flows from one company to the other, and it comes straight out of plan assets.

Stack those three layers and the total cost of a plan can run well above 1% per year. The Department of Labor's own math puts the price in plain terms. A 1% gap in total yearly fees erases 28% of the final balance over a full career. On a plan that would have reached $1 million, that is $280,000 gone. Not lost to a bad market. Lost to fees.

None of that shows on the statement as a line called "fees paid." It shows up as a smaller number in the balance column. The statement was built to show growth. It was not built to show cost.

The advice does not fail people. It fails the system they are trying to run.

Capitalize, an automated rollover firm, surveyed 401(k) holders in 2026. They found that 71% could not name the total yearly cost of their plan. A 2021 Government Accountability Office study found that 41% of workers think they pay no fees at all.

The data exist. A federal rule, the 408(b)(2) disclosure, requires covered service providers to disclose their own compensation to the plan admin. It shows direct costs and indirect ones. It names the revenue-sharing to the penny. The law says the provider must send it. Most plan sponsors have never pulled it from the file.

The problem is not that the fees are hidden behind a wall. The problem is that the statement replaced the need to look. Most people treat this as a knowledge gap. It is a design flaw.

Under ERISA Section 409, any fiduciary of a 401(k) plan carries liability for losses caused by a breach of fiduciary duty. The company, the individual, or both. In 2015, the Supreme Court ruled in Tibble v. Edison that this duty does not stop when you select the funds. It continues for as long as the plan runs. You have to keep watching.

"Set it and forget it" is the exact behavior the Court said breaks the statute.

The lawsuits prove it. Nearly 70 ERISA class actions were filed in the first quarter of 2026, up from under 40 in the same period of 2024 and 2025. The pace is not slowing. Once filed, these cases stick. Plaintiffs who sought class certification won 95% of the time in 2025. Schlichter's own firm drove the Liberty Mutual case to a $13.4 million settlement across 50,000 plan holders. The terms required Liberty Mutual to commission an independent review of outside consulting services and barred its recordkeeper from cross-selling to members.

That is not a one-off result. It is a pattern with a 95% win rate on the first procedural test.

The fix is not picking different funds. It is auditing the fee stack. Once that is clear, three moves follow.

Call your plan provider and request the most recent 408(b)(2) disclosure. They must hand it over by law. It lists every fee layer, including indirect payments between fund companies and the recordkeeper. Most plan sponsors have never read this document. That is worth sitting with for a moment, because the document you have never opened is the one that names the cost you have never measured.

Take the fund expense ratio, the recordkeeping fee, and the revenue-sharing total. Add them together. Express the sum as a single yearly percentage of total plan assets. This is your all-in cost. The gap between this number and what you assumed you were paying is usually the first real shock.

If 1% in yearly fees erases 28% of the end balance, what does your number erase? Run the math on your plan's current assets. Write down the dollar figure. That answer tells you whether the current provider earns what they charge, or whether you are funding a fee structure no one asked you to approve.

Running this once does something the old advice never did:

It shows which fee layer grew the fastest. It shows whether the recordkeeper earns more from revenue-sharing than from the stated fee. It shows the dollar amount your plan lost to cost, not to the market. And it shows whose name carries the liability if those costs turn out to be too high.

At the end of this quarter, ask three things.

→ What is the all-in fee percentage, and how does it compare to what you assumed?

→ Which fee layer changed without your review or approval?

→ Has anyone read the 408(b)(2) since the plan was set up?

That is the gap between advice that sounds right and a system that proves itself.

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Your last plan statement showed a balance. It did not show what that balance cost. The fee stack runs whether you audit it or not. Now you know what the statement left out, and whose name sits on the liability line.