2009 Tax Information
IMPORTANT 2009 TAX INFORMATION FOR PAX WORLD SHAREHOLDERS
Please note that the information below does not constitute tax advice. Please consult your personal tax adviser to determine how new tax laws and your state’s reporting requirements will affect your individual tax return.
QUALIFIED DIVIDENDS:
The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the maximum tax rate on “qualified dividends” to 15% (5% for those in the 10% and 15% income tax bracket). What this means to you: Form 1099-DIV will report the total amount of the distribution paid in box 1a. In box 1b, the Form will report the portion of that distribution that may be considered Qualified Dividend Income.
The percentage of income earned in 2009 by each of the Pax World Funds that is Qualified Dividend Income (QDI) is provided in the table below. This percentage of the total ordinary income distribution is qualified for the QDI tax rate based on how long the fund held the securities that paid dividends. However, in order to enjoy the lower tax rate you would had to have owned your fund shares for at least 60 days during the 120 day period that began 60 days before the fund’s ex-dividend date.
FOR YOUR STATE AND LOCAL TAX RETURNS:
Tax-deferred and tax-exempt account holders (i.e. IRA, SEP-IRA, 403b, self-directed retirement plan) may disregard the following tax information.
Pax World Balanced Fund holds Federal Home Loan Bank (FHLB) and Federal Farm Credit Bank (FFCB) bonds in its portfolio. Interest earned from these bonds is subject to federal income tax, but is generally exempt from state and local income taxes. The pass-through exemption rate for 2009 equals 8.27% of the total income dividend earned.
To calculate the amount of your exemption, multiply the “Dollar Amount” sum of the June and December
“Dividend-Reinvest” or “Dividend-Cash” transactions by .0827 (these transactions are located in the Account Activity section of your year-end statement).
If your state imposes threshold requirements or an intangibles tax, it may affect your ability to claim a pass-through exemption. The following information should be provided to your tax adviser to help determine if you are eligible for any exemptions.
Pax World Growth Fund, Pax World High Yield Bond Fund, Pax World Value Fund, Pax World Women’s Equity Fund, Pax World International Fund, Pax World Small Cap Fund and Pax World Global Green Fund earned no income from federal obligations in 2009.
Again, due to the complexity of each state’s individual requirements, we strongly suggest that you consult your tax advisor.
For questions, please contact us.