12b-1 Fees

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Brantley
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12b-1 Fees

Post by Brantley »

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.
~Brantley
Sciray
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Re: 12b-1 Fees

Post by Sciray »

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.
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Brantley
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Re: 12b-1 Fees

Post by Brantley »

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).
What leads you to believe the fund has a back end load?
~Brantley
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Dutch
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Re: 12b-1 Fees

Post by Dutch »

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.
dodonnell
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Re: 12b-1 Fees

Post by dodonnell »

JPMorgan SmartRetirement 2050 C

The class used in your 401k most likely is very similar to this funds 12b-1 Fees of 0.75%.
fposte
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Re: 12b-1 Fees

Post by fposte »

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.
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Brantley
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Re: 12b-1 Fees

Post by Brantley »

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.
Yes CUSIP is correct. What would the back-end charge be disclosed as?
~Brantley
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Brantley
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Re: 12b-1 Fees

Post by Brantley »

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%.
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).
~Brantley
fposte
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Re: 12b-1 Fees

Post by fposte »

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.
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Brantley
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Re: 12b-1 Fees

Post by Brantley »

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.
You're correct - it is a commingled Pension Trust. He will follow up with the plan administrator.
~Brantley
Jeff7
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Re: 12b-1 Fees

Post by Jeff7 »

Sciray wrote:Never invest in anything you don't understand.
...
I wouldn't want to invest in something that the selling company doesn't seem to properly understand. :D


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.
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Brantley
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Re: 12b-1 Fees

Post by Brantley »

I'll give you all an update if he follows up with the plan administrator. I hope he does.
~Brantley
Sciray
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Re: 12b-1 Fees

Post by Sciray »

Jeff7 wrote:I wouldn't want to invest in something that the selling company doesn't seem to properly understand. :D
That's an exponentially better point to make.
Sciray
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Re: 12b-1 Fees

Post by Sciray »

Brantley wrote:What leads you to believe the fund has a back end load?
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).
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