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For many households, the penalty for not having health insurance under the Affordable Care Act will "almost always" run more than the $95 figure often cited in news reports.

That's according to the Tax Policy Center, which recently rolled its ACA Tax Penalty Calculator. It helps people figure out how large their tax penalty will be if they don't get required coverage by March 31.

For a married couple with two kids and adjusted gross income of $50,000 a year, the penalty could run about $300 a year. The same family making $100,000 a year could be subject to a fine of about $800.

Roberton Williams, a TPC fellow, explained that the $95 applies only for relatively low-income households. For higher-income families, the penalty is 1% of income, minus certain adjustments, up to the average national cost for getting basic insurance coverage, known as "bronze" coverage. That will cost about $3,600 per adult plus $1,900 per child in 2014, Mr. Williams said.

The penalty will rise in later years—to 2% of taxable income with a minimum of $325 in 2015, and 2.5% of income but at least $695 in 2016 (again capped at the average annual premium for bronze plans).

Elsewhere on the ACA front, the administration allowed insurers to continue selling plans that don't meet the law's more rigorous standards, until 2016 in some instances. It was the second time the administration delayed that requirement after the law's standards prompted insurers to cancel millions of people's health plans last year. The latest delay averts another raft of cancellations before this year's midterm elections.

—Louise Radnofsky
The Wall Street Journal

—John D. McKinnon
Washington Wire blog,

Defaults on 401(k) Loans

Investors run up billions of dollars a year in defaults on loans taken from 401(k) plans, ignoring warnings from financial advisers they're incurring needless tax hits and endangering their retirement nest eggs.

At the same time, 401(k) participants have been taking out more loans against their accounts since the start of the financial crisis, according to a study by consulting group Aon Hewitt.

That "paints a very sobering picture of America's capacity to save for retirement," says Rob Austin, director of retirement research at Aon Hewitt.

In 401(k)s and related accounts, one in four participants has borrowed against his or her principal, according to Aon Hewitt. An estimated $6 billion a year in loans wind up in default, finds a study by University of Pennsylvania's Wharton School.

The vast majority do pay off their loans, says Jean Young, a co-author of the report and a senior research analyst at the Vanguard Center for Retirement Research. People making less than $30,000 a year are the most likely to need a 401(k) loan, Ms. Young says.

Mr. Austin says much 401(k) borrowing probably takes place without much outside expertise. Financial advisers typically target more affluent investors.

—Murray Coleman

Pimco Outflow Continues

Investors fled Pacific Investment Management Co.'s flagship Total Return fund for a 10th straight month in February, pulling out a net $1.6 billion, according to Morningstar.

Pimco is struggling to contain turmoil caused by the 2013 bond-market selloff, the company's uneven performance last year and the surprise departure of its high-profile chief executive, Mohamed El-Erian.

—Daisy Maxey
The Wall Street Journal


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