What is 12b-1 fee?

So-called “12b-1 fees” are fees paid out of mutual fund or ETF assets to cover the costs of distribution – marketing and selling mutual fund shares – and sometimes to cover the costs of providing shareholder services. 12b-1 fees get their name from the SEC rule that authorizes a fund to charge them.

Are 12b-1 fees included in net expense ratio?

12b-1 fees are usually set on a percentage basis in the range of . 25% to 1.00% of assets per year but occasionally it is a flat amount.” All 12b-1 fees are something of a hidden charge, because they are taken out of the NAV (Net Asset Value). 12b-1 fees are included in the expense ratio.

Are IRA management fees taxable?

You have to pay IRA management/custodian fees with the money in a retirement account (which is subtracted directly from the account without tax consequences) or pay the fee with outside/personal dollars instead. Only then can you claim the itemized deduction.

Are 12b-1 fees charged annually?

A 12b-1 fee is an annual marketing or distribution fee on a mutual fund. The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund’s expense ratio. It is generally between 0.25% and 0.75% (the maximum allowed) of a fund’s net assets.

Are 12b-1 fees revenue sharing?

The 401(k) industry calls it revenue sharing. The mutual fund industry calls it 12b-1 fees, subtransfer agency fees, shareholder servicing fees, and profit-sharing payments. The DOL has taken the position that fiduciaries have a duty to know and evaluate indirect payments. …

Do management fees count towards RMD?

The advisor fees can be drafted directly out of the account and are not reported as distributions, therefore they cannot be credited toward your RMD. If you want to preserve your IRA assets, you could take your RMD distribution and then use some of those distributed funds to pay the advisor.

Are 12b-1 fees included in expense ratio?

A 12b-1 fee is an annual marketing or distribution fee on a mutual fund. The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund’s expense ratio. It is generally between 0.25% and 0.75% (the maximum allowed) of a fund’s net assets.

What is contingent deferred sales charge?

A contingent deferred sales charge (CDSC) is a fee, sales charge or load, which mutual fund investors pay when selling Class-B fund shares within a specified number of years from the original purchase date. This fee is also known as a “back-end load” or “sales charge.”.

What is 12b-1 mutual fund?

A 12b-1 fund is a type of mutual fund that charges its holders a 12b-1 fee. A 12b-1 fee is a fee used to pay for a mutual fund’s distribution costs. It is often used as a commission to brokers for selling the fund; 12b-1 funds take a portion of investment assets held and use them to pay expensive fees and distribution costs.

What is the average mutual fund expense?

The average expense ratio for actively managed mutual funds is between 0.5% and 1.0% and typically goes no higher than 2.5%, although some fund ratios have gone higher. For passive index funds, the typical ratio is approximately 0.2%. Expenses can vary significantly between different types of funds.