A meeting with a retirement adviser 2002 in Miami, Florida, 2002.
A meeting with a retirement adviser 2002 in Miami, Florida, 2002. - 

Americans both young and old are having trouble saving for retirement and there’s growing concern around the myriad of fees associated with these types of savings accounts.

 

The most recent news around this are employees at Massachusetts Institute of Technology, New York University and Yale who filed lawsuits against the universities Tuesday. They allege that the schools failed to monitor retirement plan fees, causing employees to lose tens of millions of dollars.

While the suits focuses on 403 (b) plans, the type offered by public and nonprofit institutions, and not the more common 401 (k) plans, it places another spotlight on the complicated system of retirement savings.  Trying to navigate the types of funds is confusing enough, but looking at the different types of fees associated with retirement is likely a dizzying experience for most.

Comedian John Oliver tackled the issue a couple months ago on his TV show, highlighting several issues with the way retirement funds work, including high fees:

 

So what are these fees exactly? The U.S. Department of Labor breaks down investment fees for 401 (k) plans into three categories:

Sales charges: Also known as loads or commissions, these fees are the costs associated the buying and selling of your shares.

Management fees: These are the charges associated with the management of an investment fund. The fees, also called investment advisory fees or account maintenance fees, are ongoing. Usually, this means whoever is managing your fund will take a percentage of your assets invested in the fund.

Other: These fees cover the more administrative tasks associated with your account — recordkeeping, sending you statements, investment advice hotlines. For this, you could be charged a flat fee, or a percentage of your invested assets (like with typical management fees).

For a deeper dive, personal finance site NerdWallet has a pretty comprehensive list of typical investment fees and how high you can expect them to be. The range anywhere from charging $1 to $30 a month to mail you paper statements to $50 to $200 a year or more for something called “inactivity fees.”

Monitoring these fees takes some diligence. There are several documents to look at, including quarterly statements, your summary plan description and your plan’s annual report, according to the Labor Department’s guide on 401 (k) fees.

“You should ask questions and educate yourself about investments,” it reads. “Monitoring your current investment selections and reviewing the investment options offered under your plan are part of a process that you, as an informed participant, will need to undertake continually.”