According to Scottrade's website, the T. Rowe Price Retirement funds are "No-load" but at the same time "Transaction fees apply". I thought the whole idea of No-load funds was not having any transaction fees. Is this a contradiction? I suspect that I'm just not understanding something.
The specific ticker symbol in question is TRRKX.
Here's the deal with that. The mutual fund can be advertised as "No Load" because the fund itself isn't charging transaction fees, even if the broker is tacking on their own transaction fees.
Some brokers do this, especially for "No load" funds because they aren't getting their usual kickback commission from the mutual fund company through the traditional channel of the mutual fund load.
Long story short: It is a technicality. It is a no load fund, but from your perspective it may not be any better than a loaded fund. It is all about who is collecting the fees. Sneaky, huh?
Here's a good article on the topic: Avoid Broker Fees.
I found the other answer unclear, so I'm contributing my $0.02.
Sales loads are charged by the fund, and are typically used to provide compensation to investment advisors for selling them to you. If you buy a no-load fund, you can generally be assured that there will not be a load imposed on the fund in the future. Usually loaded funds are a waste of money.
If you don't buy funds directly from the fund family and use a broker, that broker will charge a commission for a "Transaction Fee" fund. Typically, brokers will also offer certain fund families as "No Transaction Fee" (NTF) funds -- the broker has deal with the fund where they pay the broker 0.40% per year to be in the NTF program. These arrangements can change over time, so be careful, especially with automatic investment programs.
A third transaction fee is a short-term or frequent trading fee. Mutual funds are not trading instruments, and if you buy and sell a fund frequently, many funds will assess a penalty and/or suspend your ability to trade for some period of time.
When you buy an NTF fund, you are paying a 0.40% premium that is built into the expense ratio. That payment is getting you convenience, better record keeping, and the abilty to use margin.
IMO, if you have alot of money, it may actually be more cost effective to invest directly with the fund family or to invest in a fund family like Vanguard that doesn't participate in NTF programs and pay the transaction fee. If you don't have alot of money, the costs associated with NTF funds is pretty insignificant.
