12b-1 Fees
12b-1 Fees
Hello all,
Legal question here. A friend of mine has a company 401(k) with JP Morgan, which includes JPMorgan Smart Retire 2050 Class C, CUSIP 202919569. We are having trouble finding information regarding fees charged. JPMorgan only provides a summary prospectus, which states "The fund is not required to file a prospectus or registration statement with the SEC, and accordingly, neither is available." We called JPMorgan to inquire if there are any 12b-1 fees. They did not know the answer, nor did they have any way to find out that information. Are they legally required to disclose whether there are 12b-1 fees? All that is disclosed is investment management fees, service fees, other expenses, and acquired fund fees and expenses. This seems very odd to me.
Legal question here. A friend of mine has a company 401(k) with JP Morgan, which includes JPMorgan Smart Retire 2050 Class C, CUSIP 202919569. We are having trouble finding information regarding fees charged. JPMorgan only provides a summary prospectus, which states "The fund is not required to file a prospectus or registration statement with the SEC, and accordingly, neither is available." We called JPMorgan to inquire if there are any 12b-1 fees. They did not know the answer, nor did they have any way to find out that information. Are they legally required to disclose whether there are 12b-1 fees? All that is disclosed is investment management fees, service fees, other expenses, and acquired fund fees and expenses. This seems very odd to me.
~Brantley
Re: 12b-1 Fees
Never invest in anything you don't understand. If they're not willing to tell you what they're doing with your money, they don't deserve to manage it. Find another fund.
Legally, the prospectus has to state that information. Since there is no prospectus, there's a lot of unknowns. Don't invest. Also, it looks like that fund has a back end load, which could cost you even more if your friend decides to leave the job and rollover the account (thus selling the shares).
There are plenty of more deserving funds to place the money. Unfortunately, a lot of 401K are pretty terrible, so your friend might want to forget about this particular 401k and invest in an IRA instead. The company match may make up for the terrible fees and management, so it highly depends on that match, if it exists.
Legally, the prospectus has to state that information. Since there is no prospectus, there's a lot of unknowns. Don't invest. Also, it looks like that fund has a back end load, which could cost you even more if your friend decides to leave the job and rollover the account (thus selling the shares).
There are plenty of more deserving funds to place the money. Unfortunately, a lot of 401K are pretty terrible, so your friend might want to forget about this particular 401k and invest in an IRA instead. The company match may make up for the terrible fees and management, so it highly depends on that match, if it exists.
Re: 12b-1 Fees
What leads you to believe the fund has a back end load?Sciray wrote:Also, it looks like that fund has a back end load, which could cost you even more if your friend decides to leave the job and rollover the account (thus selling the shares).
~Brantley
Re: 12b-1 Fees
The plan administrator is required to disclose all fees in the plan.
The plan administrator would be working for the company that employes your friend, usually somebody like HR director, benefits administrator, CFO etc.
The plan administrator would be working for the company that employes your friend, usually somebody like HR director, benefits administrator, CFO etc.
Re: 12b-1 Fees
JPMorgan SmartRetirement 2050 C
The class used in your 401k most likely is very similar to this funds 12b-1 Fees of 0.75%.
The class used in your 401k most likely is very similar to this funds 12b-1 Fees of 0.75%.
Re: 12b-1 Fees
It's a Class C fund, so there's usually some back-end charge.
Are you sure about the CUSIP, though? J. P. Morgan's look generally to start with 4812A.
Are you sure about the CUSIP, though? J. P. Morgan's look generally to start with 4812A.
Re: 12b-1 Fees
Yes CUSIP is correct. What would the back-end charge be disclosed as?fposte wrote:It's a Class C fund, so there's usually some back-end charge.
Are you sure about the CUSIP, though? J. P. Morgan's look generally to start with 4812A.
~Brantley
Re: 12b-1 Fees
Not positive about that. The expense ratio for JTSCX is a fair amount higher as compared to the amount charged by his 401k (.78 net fee).dodonnell wrote:JPMorgan SmartRetirement 2050 C
The class used in your 401k most likely is very similar to this funds 12b-1 Fees of 0.75%.
~Brantley
Re: 12b-1 Fees
I'm guessing this is some kind of proprietary private flavor that is somehow constituted as not a SEC registered mutual fund. Somebody else here will know more about such things, but I agree with Dutch that the place to go is the plan administrator at your friend's employer.
Re: 12b-1 Fees
You're correct - it is a commingled Pension Trust. He will follow up with the plan administrator.fposte wrote:I'm guessing this is some kind of proprietary private flavor that is somehow constituted as not a SEC registered mutual fund. Somebody else here will know more about such things, but I agree with Dutch that the place to go is the plan administrator at your friend's employer.
~Brantley
Re: 12b-1 Fees
I wouldn't want to invest in something that the selling company doesn't seem to properly understand.Sciray wrote:Never invest in anything you don't understand.
...
The question of "What are you charging me for the service you are providing?" should not be a difficult one for the provider to answer. If it is, either they are poorly-run and genuinely don't know, or else there are some things that are in their interests to keep concealed from you.
Re: 12b-1 Fees
I'll give you all an update if he follows up with the plan administrator. I hope he does.
~Brantley
Re: 12b-1 Fees
That's an exponentially better point to make.Jeff7 wrote:I wouldn't want to invest in something that the selling company doesn't seem to properly understand.
Re: 12b-1 Fees
Sorry, to be clear, the "Class C" in the name of the fund tells you the share type. These back-end charges are usually diminished if you don't sell the shares before 3-5 years after you purchase them, which is fine if it's a 401K since you won't be selling these until retirement (except if you roll it over into an IRA if the friends leaves the current job).Brantley wrote:What leads you to believe the fund has a back end load?