Dear Plan Members,
On behalf of the El Paso Firemen & Policemen's Pension Fund Board of Trustees, I would like to sincerely welcome you to the official website of the El Paso Firemen & Policemen's Pension Fund. We hope that the information provided will be of both interest and value to you. Our mission is to make this website user-friendly to our membership and we strongly encourage our members and other interested parties to offer any suggestions to improve and make this site more useful. Should information about the plan exceed the general information found on this site, please feel free to contact our office for further assistance.
Robert J. Stanton
Executive Director
Request for Proposal - Independent Financial Auditing Services
Notice to Retirees
Making Work Pay Credit - Important Tax Information for Retirees
The Making Work Pay credit provision was signed into law on February 17, 2009, as part of the American Recovery and Reinvestment Act of 2009 ("Act"). This provision requires the El Paso Firemen & Policemen's Pension Fund to withhold less income tax from your pension benefit, even if you are not eligible for the Making Work Pay credit, with the result that you ultimately may have to pay more income tax because of the required reduced withholding. The only way to avoid the reduced withholding is to submit a new Form W-4P to the Fund specifying the amount you want withheld or claiming fewer exemption allowances.
Background
For 2009 and 2010, the Making Work Pay provision of the Act will provide a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns. For people who receive a paycheck and are subject to withholding, the credit will typically be handled through automated withholding changes.
In order to provide this benefit, the Internal Revenue Service ("IRS") has implemented new withholding tables which likely will reduce the amount of income tax withheld from your benefit payment, effective with your March 31, 2009 benefit check. These changes may result in an increase in take-home pay because fewer taxes will be withheld.
It is important to note that only individuals with earned income are eligible for the Making Work Pay credit. Earned income for the Making Work Pay credit means income from wages and self-employment. Because pension income is not considered earned income, it is not subject to the Making Work Pay credit and your tax liability will not change; however, the IRS requires the El Paso Firemen & Policemen's Pension Fund to use these new withholding tables. You may owe more taxes at the end of the tax year due to less income tax being withheld.
How to Avoid the Reduced Withholding
You are not required to make a change to your current withholdings, however, if you do not want to have your withholding reduced, you need to file a new withholding form (Form W-4P ) with the El Paso Firemen & Policemen's Pension Fund.
To change the amount of federal income tax withheld from your retirement benefit, complete and submit to the Fund a new Withholding Certificate for Pension or Annuity Payments form located on the Forms page. Specify the amount you want withheld or request fewer exemption allowances (if applicable).
Should you have questions regarding these changes, please contact the IRS or a qualified tax advisor. The El Paso Firemen & Policemen's Pension Fund is not able to advise retirees on tax issues. To learn more about Making Work Pay please go to: www.irs.gov |
