Oppenheimer Funds: Penalty-Free Withdrawal Strategies for Investors

Consult your financial advisor

Oppenheimer Funds has a broad range of investment options for individual investors. Most of their individual fund choices can also be purchased by retail investors in one of three ways, either as A shares, B shares, or C shares. (N and Y shares are available to institutions and through 401k plans.) A shares charge an upfront sales charge, B shares have a contingent deferred sales charge, which is paid if the fund is sold within a certain time period, while C shares have a smaller deferred sales charge paid over a shorter period of time. The way to withdraw out of the Oppenheimer Fund family without a penalty will depend on which share class you originally purchased.

Step 1

Liquidate your A share purchases. If you originally bought A shares, you paid a sales charge of up to 5.75 percent when you bought the fund. In exchange for the higher upfront fee, Oppenheimer allows you to sell your A shares at any time without any further charge or penalty. Obviously, the sooner you sell the shares, the more likely you are to realize a loss on your investment, and this could be considered a penalty, even though you were not charged an additional fee for the sale. For example, if you buy your A shares, pay the fee, then immediately sell your shares, while there will be no additional charge, you will have lost up to 5.75 percent of your investment right away, rather than giving your investment a chance to recoup this cost.

Step 2

Be patient with your B shares, then sell them. At Oppenheimer Funds, B shares will charge you no upfront fee, but if you sell the shares within 6 years, you will have to pay a penalty fee or varying size, up to 5 percent. However, after owning B shares for 6 years, they automatically convert into A shares, which carry no deferred sales charge. Thus, if you own B shares and can wait, after 6 years you can sell them for no penalty, exactly as you could with A shares.

Step 3

Sell your C shares after one year. C shares at Oppenheimer do not have an upfront sales charge, but they do carry a deferred sales charge, much like B shares. However, with C shares, the amount of the deferred sales fee is only 1 percent, and it vanishes after you have held the fund for one year.

Step 4

Establish an automated withdrawal program. If you set up automatic withdrawals of at least $100, you can redeem both B shares and C shares without a penalty, as long as these payments do not exceed 10 percent of your account value in any one year.