penalty plan

Penalty Plan

In a mutual fund, a plan in which all sales fees are paid in the first few years of ownership in the fund. This means that if the shareholder redeems his/her shares in the first few years of ownership, sales fees are deducted, and the shareholder only receives a small portion of his/her original investment. These deductions gradually lessen with time and eventually go to zero in order to encourage long-term investment in the fund. The rules governing penalty plans were established in the Investment Company Amendments Act of 1970.

penalty plan

A mutual fund accumulation plan in which sales fees for the entire obligation are deducted from shares purchased in the first few years that the plan is in effect. In the event that the investors redeem the shares after a short time, only a small portion of the purchase price will be refunded. Sales charges and penalty plans are regulated by the Investment Company Amendments Act of 1970.
References in periodicals archive ?
airlines from complying with a European Union emissions penalty plan "a positive sign" in an e-mail Monday.
Meanwhile, Irish drivers caught speeding in Britain or in the North will get points under a new cross-border penalty plan.
Indeed, when the GOP's entire marriage penalty plan is fully in place, two-thirds of its annual tax cuts will go to couples making more than $75,000 a year.
But FIFA hope their latest penalty plan will be fairer.
The Connecticut Network to Abolish the Death Penalty plans a May 8-13 march from Gallows Hill at Trinity College in Hartford, the site of executions in colonial days, to the prison in Somers.