Recording 12b-1 Fees

Unknown

My investment company passes along any 12b-1 fees (advertising and marketing) that a fund pays to the advisor.

How would I record these in Quicken - would they be an offsetting Investment Expense? Much like a dividend from an insurance company is a "return of premium."

Interested in how others are recording 12b-1 fees.

Unknown

Hi Dawne,

I'm sorry if this is causing any confusion or frustration. To help us provide you with the most appropriate answer, please let us know which Quicken product (QWin or QMac), what version (2015, 2016, etc.) and what release you have installed. Also, let us know whether you using the US version of Quicken or Quicken Canada.

Thanks,
Dave

Jim_Harman

Is this a credit to your account for the 12b-1 fees that partially offsets your advisor's fees? If so then as you suggest I would use the same Quicken Category as you use for the fees, so your reports will show the net fees.

q_lurker

How about clarifying how this is being reported to you and how it is impacting your account?  Is cash added to your account or deducted from your account?  Does your share count change?   

Normal practice is for the mutual fund (MF) family to remove a portion of the capital in the account on an annual basis to pay for marketing and advertising fees.  These withdrawn funds are called 12b-1 fees.  This has the effect of reducing the performance of the fund, but there is no direct "cost" to the investor.  The MF is required to limit how much they withdraw for these expenses and to report to the investors what that amount is (usually in the vicinity of 1%).  

In that normal practice,there would be no transaction to record in Quicken.  

Unknown

Thanks all - Using Quicken 2017 for Windows Version R4, Build 26.1.4.5 on my iMac via Parallels.

Yes, MOST agencies CHARGE 12b-1 fees, and it is included in the expense ration. However, these fees, which are often paid to the advisory firm are passed onto the investor - our firm does not keep 12b-1 fees. 

They're small, but they're added to the account in the form of a cash distribution (not reinvested in additional shares).

It appears Jim might be on target - they could be included in Quicken to offset advisory fees. 

I suppose it really will depend on if/how they report these credited amounts - if they're included on a 1099, then they'd be div income, if not, they'd be an offset of fees.

Thanks for the feedback.

q_lurker

Dawne Holz said:

Thanks all - Using Quicken 2017 for Windows Version R4, Build 26.1.4.5 on my iMac via Parallels.

Yes, MOST agencies CHARGE 12b-1 fees, and it is included in the expense ration. However, these fees, which are often paid to the advisory firm are passed onto the investor - our firm does not keep 12b-1 fees. 

They're small, but they're added to the account in the form of a cash distribution (not reinvested in additional shares).

It appears Jim might be on target - they could be included in Quicken to offset advisory fees. 

I suppose it really will depend on if/how they report these credited amounts - if they're included on a 1099, then they'd be div income, if not, they'd be an offset of fees.

Thanks for the feedback.

@Dawne:  Thanks for the clarification.  So I interpret your comments to mean that you are the 'brokerage agent / advisory agency", and you are kicking back to your clients the 12b-1 fees that the MF family pays to you.  Further, (since I hope you are not doing the agency's accounting in Quicken), i suspect you were asking on behalf of a client who is using Quicken.  If so, I congratulate you on two counts:  Paying back the fees and offering quality customer service to research this question.  

Further, I agree, Jim is on target with his suggestion.  

Unknown

Dawne Holz said:

Thanks all - Using Quicken 2017 for Windows Version R4, Build 26.1.4.5 on my iMac via Parallels.

Yes, MOST agencies CHARGE 12b-1 fees, and it is included in the expense ration. However, these fees, which are often paid to the advisory firm are passed onto the investor - our firm does not keep 12b-1 fees. 

They're small, but they're added to the account in the form of a cash distribution (not reinvested in additional shares).

It appears Jim might be on target - they could be included in Quicken to offset advisory fees. 

I suppose it really will depend on if/how they report these credited amounts - if they're included on a 1099, then they'd be div income, if not, they'd be an offset of fees.

Thanks for the feedback.

Apologies if I was not clear. I'm the investor, not the advisory agent.

Thanks all!

q_lurker

Dawne Holz said:

Thanks all - Using Quicken 2017 for Windows Version R4, Build 26.1.4.5 on my iMac via Parallels.

Yes, MOST agencies CHARGE 12b-1 fees, and it is included in the expense ration. However, these fees, which are often paid to the advisory firm are passed onto the investor - our firm does not keep 12b-1 fees. 

They're small, but they're added to the account in the form of a cash distribution (not reinvested in additional shares).

It appears Jim might be on target - they could be included in Quicken to offset advisory fees. 

I suppose it really will depend on if/how they report these credited amounts - if they're included on a 1099, then they'd be div income, if not, they'd be an offset of fees.

Thanks for the feedback.

it was the "our firm" phrase that led me astray.  So its is one congrats to the firm you use and one to you personally.   

Jim_Harman

I think the fee rebates should show up as lower fees, not 1099 income.