Distribution guide
ARTICLE TAKEAWAYS
- Understand the general requirements for withdrawals and distributions
- Understand the options and payment methods available to process a distribution from an account
Distribution guidelines
Review the appropriate account type for specific distribution requirements.
Timing
If your client’s bank account is already linked, the distribution will be deposited into their bank account within 3 business days. There is a 10-calendar-day waiting period to redeem to a newly linked bank account unless a signature guarantee is provided with the request.
Distributions sent by check are mailed the business day after the transaction is processed. Checks are generally delivered within 7 days. Expedited mailing options are available for a fee.
Fees
- Class C and Class 529-C shares: There is a 1% contingent deferred sales charge (CDSC) that is assessed when shares are sold within the first year of purchase. Each investment has its own holding period for the CDSC, based on the original purchase date.
- Class A shares: Shares purchased at net asset value (NAV) have a 1% CDSC that is assessed when shares are sold within the first 18 months of each purchase.
For non-retirement, account-specific Class C CDSC calculations, locate the account in Client Accounts and click Profile and Settings, then Estimated Gain/Loss. Follow the prompts to view the estimated CDSC. For an estimate of a CDSC for any other account type or to estimate a Class A share CDSC, contact us.
The CDSC may be waived in certain situations. Contact us to discuss your client’s situation.
Maximum distribution amounts
The maximum distribution amount that can be processed per investor, per day is $125,000 online or $250,000 by phone. Requests over this amount must be made in writing and require a signature guarantee from all account owners.
Fund minimum requirements
The fund minimum must be maintained to keep an account open. Distribution requests that will reduce a fund below the minimum cannot be processed.
Reinvesting a distribution at NAV
Proceeds from a distribution, dividend payment or capital gain distribution may be reinvested without a sales charge into any fund within 90 days of the receipt of the proceeds. Certain restrictions may apply. Review Right of reinvestment for additional information.
Tax forms
In most cases, a distribution will generate the following tax forms:
- Non-retirement accounts will generate Form 1099-B
- Retirement accounts will generate Form 1099-R
- CollegeAmerica® accounts and Coverdell ESAs will generate Form 1099-Q
- ABLEAmerica® accounts will generate Form 1099-QA
Tax forms are sent in January of the year following the distribution. Refer to the Tax Center on the investor website for the tax form schedule.
Distribution requests from clients via email
To reduce instances of fraud, distribution requests received by email should be verified with the client through additional means, such as a phone call.
If you contact us by phone to process a distribution request that was sent to you by email, we require verbal confirmation that you have verified the request with the client through means other than email before the request can be processed.
Distribution options
Refer to the distribution details for the specific account type for more information.
One-time distributions
Distribution requests can be submitted online, by phone or in writing. Distribution requests that require a signature guarantee must be sent via mail.
- To complete a request online, log in to Client Accounts and click Sell.
- To request in writing, locate the appropriate distribution request by account type in Forms & Literature or review the distribution guidelines by account type.
Automatic or recurring distributions
An automatic withdrawal plan can be established to provide your client with recurring distributions. Most account types are eligible; however, restrictions apply for certain retirement accounts.
The minimum distribution amount for a single transaction is $50 per fund. The automatic plan can be set up to distribute:
- Fixed dollar amounts
- Fixed numbers of shares
- Fixed annual percentages
- Declining account balance amounts
Depending on the account type, an automatic withdrawal plan can be established online, by phone or in writing. The request must be mailed in the following situations:
- The bank account is not on file
- When a signature guarantee is required
To establish an automatic withdrawal plan online, log in to Client Accounts and click Automatic Transactions.
Note: Automatic withdrawal plans cannot be added online for retirement, CollegeAmerica or ABLEAmerica accounts.
To establish an automatic plan in writing, locate the appropriate form in Forms & Literature.
Note: To establish an automatic required minimum distribution plan for your client, complete the Required Minimum Distribution (RMD) Request. Review the Required Minimum Distribution (RMD) Guide for additional information.
Payment methods
Payment by check
The default payment method is a check. Checks must be made payable to the account owner and mailed to the address on file unless a special pay order is requested.
A signature guarantee is required for a special pay order or a request to mail a check to an alternate address.
Exceptions are made for CollegeAmerica accounts and Coverdell ESAs. In these cases, the check is payable to the school and mailed to the school’s billing department.
Payment by Automated Clearing House (ACH)
Distributions can be made by ACH to the bank account on file. Requests to add a bank account for ACH distributions must be made in writing and require an initial 10-business-day hold unless a signature guarantee is provided. Review Managing client banking information for complete requirements.
Payment by wire transfer
A wire transfer option can be added to Class A, C and F shares of the American Funds U.S. Government Money Market Fund in most non-retirement accounts.
Requests must be made in writing using the Mutual Fund Account Options form, and a signature guarantee is required. Review Managing client banking information for additional information.
One-time wire transfers require a completed Request to Sell Shares. Certain retirement accounts may be excluded.
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The guidelines and procedures provided in the Account Resource Center may not apply to networked accounts or accounts not directly held by American Funds. The guidelines and procedures provided also apply only to those retirement accounts or Coverdell ESAs invested in American Funds with Capital Bank and Trust Company (CB&T) as custodian. The guidelines and procedures provided in the Account Resource Center do not apply to plans held in our retirement plan solutions — PlanPremier, PlanPremier-TPA or RecordkeeperDirect. Information on the Account Resource Center may change periodically, and previously printed information may not be current. Please refer to capitalgroup.com for the most current information available.
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Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state’s 529 plan, investors should consult a tax advisor.