T. Rowe Price to Fine Retirement Plan Market Timers

November 30, 2004 (PLANSPONSOR.com) - In an effort to stop market timing in retirement accounts, the T. Rowe Price Group Inc. will now charge investors a fee for selling mutual fund shares shortly after they have been bought in such accounts.

Starting January 1, the mutual fund company will impose penalties on 401(k) and other retirement plans for certain trading activity, according to Dow Jones. Profit-sharing, SIMPLE IRAs and money purchase pension accounts that the company or other financial intermediaries provide recordkeeping services for will be affected.

The fund has already charged investors who market time with their directly-owned funds a redemption fee, but this move, which will apply to participant-directed transactions in retirement accounts, goes a step further. It comes as a result of a September board decision, according to Dow Jones, and follows similar moves by the company to deter potential market timers from using their funds.

T. Rowe price is one of many mutual fund companies that have instituted redemption fees of all sorts in order to stop market timing in their funds. Fidelity Investments and Putnam, for example, slapped redemption fees for market timing late last year, a move that would become common as the industry attempted to clean up the wreckage from the late trading and market timing scandal (See Fidelity, Putnam Add More Fees to Fight Market Timing ). Other fund companies imposing redemption fees include Federated Investors (See Federated Imposes Redemption on Some Funds ), PIMCO (See PIMCO Expands Redemption Fees ), and Franklin Resources (See Franklin Slaps on Redemption Fees ).