12B-1 Plan


DEFINITION of '12B-1 Plan'

A no-load mutual fund that is allowed to use fund assets to pay for its distribution costs. The 12B-1 plan mutual fund is an alternative to paying the sales fees encountered in loaded funds. By charging an annual percentage based on the current value of the investment on an annual basis, investors avoid paying a front-end or back-end load when purchasing or redeeming the fund.


The government typically restricts 12B-1 fees to 1% of the current value of the investment on an annual basis, but they generally fall somewhere between 0.25-1%. This fee must be voted on by the mutual fund's directors, and must be disclosed in the mutual fund prospectus. Because this fee is a little less obvious (not an upfront charge like the 12B-1 fee), investors should read mutual fund documentation thoroughly to understand the fees they are paying.

  1. Back-End Load

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  2. No-Load Fund

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  3. Contingent Deferred Sales Charge ...

    A fee (sales charge or load) that mutual fund investors pay when ...
  4. Front-End Load

    A commission or sales charge applied at the time of the initial ...
  5. Open-End Fund

    A type of mutual fund that does not have restrictions on the ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
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