FINRA permits an additional service fee on top of the 12b-1 fee up to how much?

• A. 0.25%
• B. 0.50%
• C. 0.75%
• D. 1.00%

Answer: (A)

The main idea here is how mutual fund fees can be structured beyond the basic 12b-1 charge. FINRA allows an additional service fee to be charged on top of the 12b-1 fee, but that extra amount is capped at 0.25% per year of the fund’s average net assets. This separate service fee is intended to cover ongoing shareholder services and must be disclosed in the fund’s prospectus. So, the maximum amount FINRA permits for that top-up is 0.25% annually. The other numbers would imply a higher top-up than allowed, even though the total 12b-1 fee can vary; the specific extra charge FINRA permits on top of the 12b-1 is 0.25%.