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Q&A From Our Life Transitions e-Mailbag

In our continuing e-Mailbag series, here are some new real-life questions and answers to share with you:

Question: Do I still have to pay a penalty in 2018 for having health insurance that doesn’t meet the requirements of the Affordable Care Act?

Answer: Yes, you do. The Tax Cuts and Job Act of 2017 made the penalty zero for the 2019 tax year, but you’re still on the hook for 2018. The penalty is roughly $695 per adult or 2.5% of household income, whichever is greater. This penalty is capped at the national average bronze plan premium for your household size.

Question: My 401k plan has a Roth 401k option. Should I be using it instead of the pre-tax 401k option I’ve always used?

Answer: The Roth 401k feature is being added to more and more employer plans. You don’t get a current year tax deduction for saving into the Roth 401k, but in exchange the withdrawals are tax-free (subject to a few age and time restrictions). Importantly, for people who make too much money to contribute to a Roth IRA, there are no wage caps for a Roth 401k. It’s a great way to build tax-free wealth that you otherwise couldn’t. A nuance of the Roth 401k is that it must be rolled out to a Roth IRA or you’ll have to take (tax-free) Required Minimum Distributions at age 70 1/2. A Roth IRA has no such requirements.

Question: On my investment statements, I’m seeing Cl A or Cl C after the names of my mutual funds. What does that mean?

Answer: That is referring to a Class A share or a Class C share. A Class A share pays a front-end load or commission to the advisor when the fund is initially purchased. It may have a smaller ongoing 12b-1 fee. Conversely, a Class C share doesn’t charge a front-end load but will have an ongoing 12b-1 fee. You will find these shares held in accounts managed by broker-dealer advisors. Fiduciary advisors use an institutional share class, Class I, that does not charge loads or 12b-1 fees.

Have Questions? Send your financial questions to Yvonne Marsh, CFP®, CPA at, and she will review your question for possible inclusion in a future column.


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