Retirement Retirement Planning

A Judge Just Changed a Major 401(k) Fee Ruling - Here’s Why Workers Should Care

Some 401(k) fees disclosures could look different.

By Jordan Major , Edited by Laura Hohenstein

Updated Aug. 28, 2026

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Fees buried inside your 401(k) could eat into retirement savings over decades, and some of the costs associated with brokerage windows could be considerably harder to spot than the expense ratio on a standard mutual fund.

A federal judge has now narrowed an earlier ruling involving fees and disclosures in AT&T's 401(k) plan. The August 3 decision is largely good news for AT&T and the retirement plan industry because the judge found that disclosing certain brokerage-window compensation as a range of fees could comply with federal rules.

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The AT&T 401(k) ruling allows some fee changes

The dispute comes from Alas v. AT&T, a long-running lawsuit involving AT&T's retirement plan and fees connected to services provided by Fidelity Workplace Services.

A March ruling raised concerns across the retirement industry because it appeared to question whether commonly used fee ranges for 401(k) brokerage windows complied with federal law.

After AT&T asked the court to reconsider, U.S. District Judge Sherilyn Peace Garnett revised that conclusion on August 3, finding that fee ranges could satisfy Department of Labor rules under appropriate circumstances.

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Why brokerage windows can make fees harder to track

Most 401(k)s offer a relatively small menu of funds selected by the plan. A brokerage window could dramatically expand those choices, sometimes giving workers access to thousands of mutual funds, ETFs, stocks, and other investments.

That flexibility could be useful, but it also makes fees more complicated. Instead of comparing a handful of fund expense ratios, participants may need to consider brokerage-account charges, transaction fees, commissions, investment-management expenses, and other costs.

Some 401(k) costs are easier to miss

Workers comparing ordinary funds could usually find an expense ratio showing the percentage of assets deducted annually to cover a fund's operating expenses.

Brokerage-window costs aren't always as straightforward. Indirect compensation adds another complication. A retirement-plan provider may receive money from third parties connected to investments or services rather than charging the participant through an obvious line item.

Federal regulations require participants to receive information about plan administrative expenses and investment-related fees, but that doesn't necessarily mean every cost would appear as one simple number. The Department of Labor's rules allow certain compensation to be described using a reasonable estimate or formula under specified circumstances.

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Small fees can become expensive over time

A fee that looks insignificant today could have a much larger effect when applied to retirement savings for decades.

Imagine two investments producing the same return before fees, but one costs substantially more each year. The higher-cost investment doesn't just take money out of the account today. You also lose the future investment returns that money could have generated. The effect compounds as the years pass.

The Department of Labor shows how even a seemingly small difference could matter over decades. In one example, a worker with $25,000 invested for 35 years, earning a 7% annual return, would finish with about $227,000 if fees reduced returns by 0.5%, compared with $163,000 if fees reduced returns by 1.5%. The 1 percentage-point difference in fees reduced the retirement account balance by 28%.

Someone using a brokerage window should therefore look beyond whether an investment has performed well recently. Comparing its total costs with similar investments available through the plan's regular menu could reveal whether the added flexibility is worth paying for.

A brokerage window isn't necessarily expensive, and a higher-cost investment isn't automatically a poor choice. The issue is knowing what you're paying and what you're receiving in return.

What workers should check in their own 401(k)

The AT&T case isn't over yet, but workers don't need to wait for the outcome to review their own plan costs.

Start with your plan's fee disclosures and account statements, paying particular attention to administrative charges and investment expenses. Anyone using a brokerage window should also check whether there are separate brokerage-account fees, transaction costs, or charges attached to individual investments.

Expense ratios deserve attention as well. Two funds with similar investment strategies could have very different annual costs, and those differences could become meaningful over a long investing horizon.

Compare brokerage-window choices

You could also compare the brokerage-window choices with the investments on your plan's core menu. A low-cost index fund already available through the standard 401(k), for example, may provide the exposure you're looking for without the added complexity of the brokerage option.

Questions about unclear charges could be directed to your plan administrator or provider before moving retirement money into an investment you don't fully understand.

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Bottom line

The AT&T ruling doesn't change what's inside your 401(k), but it highlights how complicated retirement-plan fees could become, particularly when you use a brokerage window.

Some costs are easy to find, while others may require digging through plan disclosures or comparing different investments. Understanding what you're paying, and whether the added investment choices justify those costs, could help you keep more of your money working toward retirement and improve your chances of being able to retire comfortably.

FAQs

How can I find out how much I'm paying in 401(k) fees?

Check your plan's annual fee disclosure, investment prospectuses, and account statements. Look for expense ratios, administrative fees, advisory charges, and transaction costs. Your plan administrator can also explain charges that aren't clear from the documents.

Can I avoid 401(k) fees completely?

Probably not. Most retirement plans and investments have some costs. However, you may be able to reduce what you pay by choosing lower-cost investments, limiting unnecessary transactions, and reviewing your plan's fees regularly.

Does my employer pay any of my 401(k) fees?

Possibly. Employers sometimes cover certain administrative costs, while other expenses are charged to participants or deducted from investment returns. Your plan documents should explain how expenses are divided between your employer and employees.

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