American Recovery and Reinvestment Act

As you may have noticed, there was a reduction in your Federal Withholding amount of your April, 2009 check. This occurred in accordance with the American Recovery and Reinvestment Act's (ARRA) "Making Work Pay" tax credit.

The Internal Revenue Service (IRS) has issued new wage withholding and advance earned income credit payment tables, as well as the explanatory Publication 15-T (http://www.irs.gov/pub/irs-pdf/p15t.pdf), which confirms that these tables apply to pension benefits as well as earned income. The new tables were applied to Benefit Payment effective with the April 30, 2009 periodic pension payment cycle.

There has been some discussion at the Federal level as to whether retirees may be subject to additional, unexpected year-end tax liability, because pension plan distributions do not qualify for the Making Work Pay Credit and as a result under-withholding could occur.

The CTA Retirement Plan has been advised by Northern Trust that The Treasury Department and the IRS are aware of the concerns that retirees may face the potential of unexpected tax liability at the end of 2009. The Treasury and IRS are considering ways to address these concerns through the regulatory process.

The CTA Retirement Plan will provide updated information on this topic as it becomes available. In the meantime, if you did receive a Federal Tax withholding reduction, you may need to revise your federal income tax withholding. Please consult with your professional tax advisor to ensure sufficient withholding from your monthly pension benefits.