msf - Thanks - But in the case where you hold the fund in a 'IRA' account, there is tax withheld by foreign government, and you don't have ability to claim a credit or a deduction for the foreign governments' withholding.
As for Schwab saying (at link in OP):

Think of it as a timing issue: The amount you pay in foreign taxes today reduces your retirement assets, and therefore reduces the amount of tax the IRS is able to collect when you start making withdrawals.

How is that any different from holding a fund with a higher expense ratio, rather than a lower expense ratio? Could I, for example, say the following with a straight face?:

Think of it as a timing issue: The amount you pay in higher expenses foreign taxes today reduces your retirement assets, and therefore reduces the amount of tax the IRS is able to collect when you start making withdrawals.

Which is precisely my point.
If I was trying to convince someone of the wisdom of buying a fund with a 12b-1 fee [*] as opposed to buying the same fund without the 12b-1 fee, would they find it convincing if I said Think of it as a timing issue?
It's not a timing issue. I believe that it's effectively a higher expense ratio, caused by the decision to hold an asset subject to foreign tax withholding in a retirement account.
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[*] www.investopedia.com/terms/1/12b-1fees.asp
PS: I think that the only case where it would be a "timing issue" is the one where you paid taxes at a rate of 100% on the money withdrawn from the retirement account. Well ... we're not there .... yet.

The short answer to your question is to reread the Schwab page, specifically the section on Deferred Accounts: "Think of it as a timing issue."
First let me note that many funds do not pass through foreign taxes at all. Global funds are not allowed to pass through the taxes if less than half their assets are foreign. Other funds simply choose not to pass through the expenses.
Say a fund has $1.10 in income, and pays $0.10 in foreign taxes. It pays a $1 dividend to you in cold, hard cash. As far as the taxes go, it has two choices.
It can say that you netted $1 of income, end of story. That is, treat the foreign taxes the same as any other expense (notably like commissions that don't show up in the ER either).
Or it can say that you received $1.10 of income, but that it held back $0.10 to pay your share of foreign taxes. That way, you show more income, but also have a pass through expense to use on your tax return.
If you choose to treat it as a deduction, you wind up with taxable net income of $1 - the same as you've got in the IRA (where you got that $1 of cash). That's also the same result as if the fund hadn't passed through the tax expense to you (you got $1 income, end of story).
Up to here, there's no difference, after taxes, between what happens with the IRA and what happens in the taxable account. Either way, you're netting $1 of taxable income. The IRA defers the taxes, but it's still $1 of income when you withdraw the dividend. That's what Schwab is talking about with its "timing issue".
There is another way to treat foreign tax pass throughs, but only in taxable accounts. So if there's a difference, it's not between taxable accounts and IRAs, but between taxpayers who take a deduction and taxpayers who take a credit. The fund doesn't know which choice you made on your 1040.
I believe the theory behind taking a credit is the same idea as paying income taxes in two states (or two countries). If one moves between states, it is possible that both states will tax the same income. Say one state taxes you at 5%, and the other at 7%. If the first state collects 5% from you, the the latter state will tax you so that the total amount you pay is 7%. It does this by giving you credit for the 5% tax you already paid.
Same idea with the foreign tax. You've already paid tax to another country on the income. So the US says that it will give you credit for that portion of your income taxes. But it won't give you credit for more than you would owe in US taxes. You cannot reduce your US tax on this particular income below zero. You wind up paying in toto the higher of the two rates, US and foreign. (This is the foreign tax credit limitation - Form 1116 - that your Schwab page is talking about.)
Either theory - tax credit or tax deduction - makes sense. One of them, the tax deduction, leads to the same after tax result in the IRA and in the taxable account.
I'm ignoring the issue of funds taxed as corporations (per IRC Section 851(b)(3)(B)(iii)) since that gets into accounting (accrued liability affecting NAV), which is a rather different animal from operating expenses. Though I suppose one could argue that it's nothing but a timing issue, again.

Expense ratios are kind of high.
I also don't see any sort of "target date" funds, which I thought had some sort of special "safe harbor" treatment as a default investment, but perhaps I am "mis-remembering" this preference given to "target date" funds in a 401k.
1% ER's in a 401K? .....

Per the article: "I haven't listed any target-date funds. We have customized target-date funds designed specifically for Morningstar employees by Ibbotson Associates, which is part of the Morningstar Investment Management group."

Expense ratios are kind of high.
Reflecting MrRuffles' observation (thank you!) , I correct with strikeout.
I also don't see any sort of "target date" funds, which I thought had some sort of special "safe harbor" treatment as a default investment, but perhaps I am "mis-remembering" this preference given to "target date" funds in a 401k.
1% ER's in a 401K? .....

With respect to foreign dividend funds/ETFs (such as those in registration at Vanguard, or offered by Wisdom Tree, others, etc.)...
The SEC requires that funds that hold >25% of their holdings in MLPs to be taxed as corporations, and accrue a deferred tax liability, which is included in the reported expense ratio of the the funds.
See for example, disclosure from AMLP, available here: http://www.alpsfunds.com/documents/pdfs/amlp-edu-20120509.pdf and expense ratio, as listed at left here: http://www.alpsfunds.com/resources/AMLP.
Why then, doesn't the SEC require that mutual funds that own foreign dividend-paying stocks report two expense ratios:
1. One expense ratio for taxable investors; and
2. One expense ratio for non-taxable investors (such as those investing through IRA accounts, for example).
While foreign taxes paid are - to some extent - recoverable via foreign tax credit or deduction, any credit can not be obtained when the funds are held in a retirement account.
Shouldn't the additional "locational burden" be disclosed, on either a mandatory (SEC) or voluntary basis? Is anyone aware of any fund that highlights the extra cost in their prospectus or annual report?
Other resources below. Thanks.
Tax Rate Schedule, circa 2011 [for example, see second table]
http://topforeignstocks.com/2011/01/23/withholding-tax-rates-by-country-for-foreign-stock-dividends/
Investopedia on Foreign Tax Credit
http://www.investopedia.com/articles/personal-finance/012214/understanding-taxation-foreign-investments.asp
Schwab on Claiming Foreign Tax Credit Deduction
http://www.schwab.com/public/schwab/nn/articles/Claiming-Foreign-Taxes-Credit-or-Deduction

Here are the risk/return metrics for GLDSX through August since inception and across various evaluation periods. (The screenshot is from our beta MFO Premium site.)
David points out that GLDSX trails the pack at the 10 year mark, which is reflected in the lifetime metrics below and across the current market cycle since November 2007.

Its performance here is another example of a fund that gets recognized for its shorter term performance (eg., Great Owl and Honor Roll designations), while the longer term performance may be lacking. We've discussed other such funds before on the board.
As a reminder, Honor Roll from the legacy Fund Alarm rating system means the fund is top quintile based on absolute return across the past 1, 3, and 5 year evaluation periods. While MFO Great Owls are top quintile based on risk adjusted returns for all evaluation periods 3 years and greater (eg., 3, 5, 10, and 20).
In this case, through August the fund is just under 10 years, so there is no 10 year ranking. But when our rankings get updated through September, the 10 year performance will be pretty poor and GLDSX will no longer get the GO designation, which is supposed to go to funds that have consistently produced top risk adjusted returns.
My rambling here is because I've been considering updating the GO designation slightly to require lifetime performance to also be top quintile if that period is less than 20 years. David Moran got me thinking along these lines a while ago...he actually has bigger issues with the designation, but he did get me thinking about imposing the lifetime constraint. As always, would appreciate any thoughts.

Thanks for insight on this issue msf, as always. Wonder who blew whistle or if it was just routine examination by SEC.
Nice article Ted. 'Cept for the math error pointed out by msf, think Gretchen Morgenson does fine job.
Wonder how widespread the practice is...in any case, hopefully case sheds more light into actual use of 12b-1 fees...

“Of course, the problem is much bigger than this one case,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “The S.E.C. has allowed 12b-1 fees to morph into distribution fees when they were originally intended to serve a very different purpose. The agency had a reform proposal ready to go back in the early days of this administration, but the industry didn’t like it, so it never went anywhere.”
There are signs, however, that the First Eagle case may be just the initial S.E.C. salvo on improper mutual fund fee practices. Tricks involving 12b-1 fees are a rich vein for the S.E.C. to mine because these charges are exceedingly opaque. Bringing cases in this area is crucial for investors since these fees drag down fund returns.
These fees also pose real conflicts of interest. Investment advisers are paid based on a percentage of assets under management; as these assets grow, so does the adviser’s income. Marketing a fund helps increase assets under management, so the investment adviser is the primary beneficiary of any fees paid for that purpose.

And, gotta love (not) this...

First Eagle’s website contains a list of its guiding principles. This is one of them: “Always act with honesty, integrity and transparency. Never have anything to hide.”

let us know what's on your list, okay?

Celgene (CELG) and Gilead (GILD) are the primary two that I have as long-term holdings. Amgen (AMGN) is also worth a look at these levels. Celgene has basically given investors guidance out to 2020 and while it's not a major part of their revenue, Celgene is interesting from the standpoint of you have a biotech that basically is picking and choosing what it believes are compelling possible collaborations in a lot of the smaller (and some larger names.)
Not an up-to-date chart, but gives an idea:

Guidance:

Gilead is now trading with a 10 p/e, so there's that (plus a massive buyback in place.)
I do think you have to have a longer-term view for these names, because the second anything even remotely concerning is associated with a possible problem for the biotech industry, people just absolutely flee like no other sector in the market.

Given the relatively small amount of money involved (as was pointed out in the NYTimes article), this may have been a situation where First Eagle cut legal corners on something it could have done legally.
It could have gone to the board and said: The fund is bleeding cash. This is causing fire sales and hurting investors. We need to staunch the outflow, by increasing marketing. Raise our management fees to cover that marketing and we'll pay for the marketing services. That would have been legal, and the net effect would have been to have the investors pay for the extra marketing expenses.
Instead, First Eagle decided to short circuit the process and just use the fund assets directly without involving the board. It was aware this wasn't legal, because it hid the payments from the board and from shareholders by saying they were for shareholder services (which were allowed to come from investor assets).
I'm not saying this was their thinking, and what they did certainly wasn't legal. But since the same investor money could have been spent legally on marketing, it doesn't seem to me that investors were fleeced. Rather, what bothers me is the deliberate illegality.
A footnote - Morgenson's calculation of the amount of money First Eagle netted from management fees on the net inflows is wrong. She said that First Eagle took in $23.1B over six years. Multiplying it by the management fee of 0.75% per year, she gets additional management fees of $173M.
But this was over six years. The average extra AUM was half of the $23.1B (assuming linear growth). And this amount should be multiplied by 0.75 times six (for six years). That makes the $25M spent on marketing look even smaller, and thus less likely that this was done by First Eagle to make an illegal buck. Hardly excuses it.

So..........First Eagle is a branch of Volkswagen? They sold their integrity and good name for 25 mil? I've had a bunch of money with these guys for 10 years -- and they stole from me? Time to move on.

FYI: A rocky week for the broader stock market has inflicted serious damage to exchange-traded funds that track biotechnology stocks.
The $8 billion iShares Nasdaq Biotechnology ETF (IBB) fell 6.5% recent trading on Friday.
The ETF has fallen each day this week, bringing its total five-day decline to 14% — the biggest weekly drop since Oct. 2008, the height of the financial crisis.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/09/25/biotech-bombs-suffers-worst-weekly-decline-since-08/tab/print/

FYI: On Sept. 21, the Securities and Exchange Commission’s enforcement division filed proceedings against First Eagle Investment Management, an asset-management company overseeing $100 billion — mostly in eight stock, bond and multi-asset funds. The S.E.C. said that from January 2008 through March 2014, First Eagle improperly billed its investors $25 million for payments to brokers marketing the funds’ shares. The commission also accused First Eagle of misleading investors by maintaining in fund documents during that period that it was paying the marketing costs itself.
Regards,
Ted
http://www.nytimes.com/2015/09/27/business/sec-turns-its-eye-to-hidden-fees-in-mutual-funds.html?_r=0

I think they've waived the minimum for Global Micro Cap and they're only offering institutional shares. I read at some point, but not in the announcement about the subscription period that the minimum to get into GPMCX institutional shares would be the same as what they normally require for the retail class.
In fact, I believe the maximum they're going to allow anyone to invest in Global Micro Cap is $100K but if they get the kind of interest I suspect they will I think they'll have to reduce that maximum or they'll have to tell a lot of people that they're not getting an allocation.

If we have the institutional shares on a 3rd party platform, are we required to put another $100,000 for the institutional shares of global micro cap?

"Succession planning" sounds like you might consider active management a risk because sooner or later the manager(s) must be succeeded by other managers. Vanguard states that VMFVX is actively manged, selecting approximately 200 stocks from out of the roughly 7200 in the FTSE Global All Cap Index (hedged).
(Vanguard PR on VMFVX)
Hedging is a hidden expense that may be increasing the total costs incurred by VMVFX by 50% or more: "the direct transaction costs of currency hedging have generally been low to moderate, historically in the range of 1 to 18 basis points annually for developed-market currencies. ... Unlike most major developed-market currencies, emerging-market currencies tend to have lower trading volumes and may be more difficult and costly to hedge." (Vanguard paper on hedging)
This fund "seeks lower risk, not outperformance". (First Vanguard link, above). IMHO, risk (volatility) reduction is an objective that makes this fund worth considering for many. Though you justifiably questioned its value for an investment intend to last 30+ years. Volatility of performance over that long a period of time would likely average out.
Vanguard does offer an unhedged fund (lower transaction costs but higher risk/volatility), passively managed (no succession planning) with stocks culled from the same FTSE Global All Cap Index (except it's the unhedged version of the index). VTWSX/VT (ER of 0.27%/0.17%).
I'm not advocating one fund over the other in general; just looking at how well these two funds fishing in the same pool align with some factors mentioned.

@STB65, vmvfx is available in the Admiral share with ER 0.20% and $50K minimum. That is a considerable saving in the long term. Question is does Vanguard charges the hedging at cost or close to it? Other funds such as Tweedy Browne Global Value has a considerably higher ER, 1.3%.

RPSIX is a fine fund. I keep a modest allocation in it - which replaced a similar allocation I kept in high yield bonds at an earlier stage of investing. The .67% ER Price lists on its website is a trite higher than I'd have guessed. It is, of course, based on the cost of the underlying funds, some of which have expenses in the 1% range.
When I want a "best guess" estimate how a find might perform over near-term time horizons, I look at Fund Max. Their calls aren't always right, but are interesting. For PRSIX they see a worst case of -15% over the next year and a best case of +11%. I'd say they are close - but erring on the cautious side. Keep in mind these are Best and Worst Case projections. Neither seems likely. (And I'll take exception to their overall score of "70". It's a better fund than that.) http://www.maxfunds.com/funds/data.php?ticker=RPSIX&pg=d
Price lists the fund's holdings in its annual and semi-annual reports available for download at T. Rowe. Notable are a potential weighting of as much as 25% in PRFDX (an equity fund) as well as substantial allocations to high yield and EM bond funds. Likely, it's these rather aggressive holdings which Fund Max thinks could pull the fund down in some sort of worst-case financial environment.

Fund Spy: A Workaround for High Alternative Fund Fees
09-24-2015 | This simple trick can help you halve some alternative fund fees.
http://news.morningstar.com/articlenet/article.aspx?id=715562
"Long-short equity funds can add useful diversification to an equity portfolio, but the strategy tends to come with a hefty price tag. The average long-short equity fund charges a whopping 1.85% expense ratio. Fees are, and have always been, the enemy of long-term returns, so it’s hard to blame anyone who considers a nearly 2% price tag a nonstarter. But with a little creativity, an investor can get a similar return profile from equity market-neutral funds at a much more appetizing price....
...The good news is that a skilled manager is skilled regardless of how much beta, or systematic risk, the strategy takes on. With the increased availability of exchange-traded funds today, investors can easily and cheaply buy beta to layer on top of a lower-exposure, alpha-generating strategy and, in the process, lower the overall fees. Let’s take a look at three different examples of how this would work."
Examples:

VMNIX + VOO  (WAvg E.R.:  10 bps)
BDMIX + URTH (WAvg E.R.:  86 bps)
GONIX + VOO  (WAvg E.R.: 109 bps)

See article and comments for details.

Because of the currency hedging, that may be an apples and oranges comparison. The dollar has been growing stronger over the past few years, so a hedged fund is likely to have done better than unhedged funds. That doesn't mean the fund will do better in the long run, as the dollar fluctuates in strength. Unless one believes that the dollar will not come down.
See my comment in another thread, which cites a Vanguard paper explaining the differences in performance between hedged and unhedged funds.
Quoting from another section of the Vanguard paper:

Over the long term, for a currency management program to produce added return in strategic asset allocations, one must believe not only in a persistent return (positive or negative) from foreign currency, but also that this return will differ substantially from the return realized by hedging.

Neither one. I moved away from both Artisan and Oakmark global funds when Vanguard Global Min Volatility became available. Lower expense ratio (0.30 vs 1.2 and 1.4% of Oakmark and Artisan, respectively), currency hedging, and better performance.