On April 17, 2025, the U.S. Supreme Court issued a unanimous decision in Cunningham v. Cornell University, that eased plaintiffs ability to bring cases for 401k and retirement account excessive fees. Previously the Second Circuit held that plaintiffs bringing claims under ERISA § 406(a) had to plead that exemptions did not apply, an additional early burden to proceed with a claim. The Supreme Court reversed that requirement, ruling that plaintiffs are only required to plead elements of a prohibited transaction (example: a plan engaged in a service transaction with a party in interest at excessive cost).

What are Excessive Fees? 

Every retirement plan charges fees. Some are administrative fees for recordkeeping and plan operations. Others are investment management fees, built into the expense ratios of mutual funds or similar products. Fees are expected as services must be paid for, but under the Employee Retirement Income Security Act (ERISA) all fees must be reasonable in light of the services provided. 

“Excessive fees” means that a plan is charging participants more than is fair, compared to what the market offers for similar services. This might occur when: 

• A plan hires a recordkeeper at inflated rates. 
• A plan offers high-cost retail mutual funds when cheaper institutional share classes are available. 
• Fiduciaries fail to negotiate fee reductions as plan assets grow. 

Even a small percentage difference matters. A worker who pays 1% in fees instead of 0.3% could lose tens of thousands of dollars in retirement savings over a career. 

ERISA Excessive Fee Lawsuits 

This decision lowers the threshold for plaintiffs to proceed past early dismissals.  The Court clarified that workers need only allege that their plan engaged in a transaction with a service provider that qualifies as a “party in interest.” Workers do not need to preemptively disprove potential exemptions that employers might later assert. This means cases can move into discovery, where documents and data about fees and services are revealed, before being dismissed.  

Retirement plans are complex, and participants rarely have access to detailed contract and pricing information at the outset. Allowing lawsuits to proceed gives workers a fair chance to uncover whether their savings are being mismanaged.   Every percentage point saved in fees is more money compounding toward a secure retirement. Litigation under ERISA is one of the few tools available to keep fiduciaries accountable and ensure workers futures are protected. 

ERISA Law Firm 

To learn more about ERISA and 401(k) benefits disputes and remedies, schedule a comprehensive claims assessment with our knowledgeable employee benefits litigation lawyers at Schneider Wallace. Contact one of our offices in California, Texas, and Washington, D.C. to schedule an appointment with our experienced class action lawyers. Schneider Wallace helps ERISA participants recover damages for excessive fees and imprudent investments. We are a national firm and, by partnering with local firms, we can assist clients in any jurisdiction.