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Retirement Settlement Process

por Angela Rivera Saettone

Retirement Settlement Process

Dear Members,

We remind all members that pay taxes in the United States, that Monday, September 16, 2019, is the deadline to make the third quarterly payment of estimated taxes for the year 2019 (Federal and/or State/D.C.) for pensions received from the IDB . According to the Internal Revenue Service of the United States (IRS), the quarterly estimated tax payment is the method by which taxes are paid on income that is not subject to withholding. The IDB does not withhold money from our pensions for the payment of taxes; thus, retirees must pay quarterly estimated taxes.

Note that if you do not pay tax throughout the year through the quarterly estimated payment method, you could incur a penalty by the IRS for underpayment of estimated tax.

For more information on quarterly estimated taxes or to download Form 1040-ES, visit: https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Additionally, we remind you that as reported by the Bank’s Tax Unit in its message of March 15, 2019 (attached for your reference), consistent with the revised Tax Reimbursement Policy, and for this transition year only, your IDB taxable retirement income in 2019 will include: (1) the 2019 pension + (2) the 2018 settlement + (3) the 2019 reimbursements. This will revert in 2020, that is, the 2020 taxable retirement income will include: (1) the 2020 pension + (2) the 2020 reimbursements. Due to this increase in the IDB taxable retirement income for 2019, the reimbursements paid by the Bank to make the estimated quarterly tax payments may be higher than the reimbursements that were paid in 2018. To avoid penalties by the tax administration authorities (IRS, State Tax Administration / DC), the total quarterly tax reimbursements received from the Bank must be paid, and by the deadline indicated above.

Regards,

Pensions and Taxes Committee

Association of Retirees of IDB Group

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