New Puerto Rico Tax Code Means Significant Changes to Retirement Plans for Puerto Rico Employees


Employers with Puerto Rico employees should consider significant changes to the requirements for qualified retirement plans made by a new Puerto Rico tax code. Immediate action may be necessary to comply with tax and withholding requirements for plan distributions.

On January 31, 2011, the Commonwealth of Puerto Rico adopted a new Internal Revenue Code (PR Code) that contains numerous changes to sections governing qualified retirement plans. Generally effective immediately for tax years beginning on or after January 1, 2011, the new code requires significant changes to plan administration and updates of plan documents for both dual-qualified plans (i.e., plans qualified under both the U.S. and Puerto Rico Internal Revenue Codes) and Puerto Rico-only qualified retirement plans.

In general, the qualified retirement plan provisions contained in the new PR Code add requirements that mirror the requirements applicable to U.S. qualified retirement plans. However, Puerto Rico continues to have provisions that result in some significant differences from U.S. qualified plans. In addition, a number of the changes simply codify rules that previously had been issued by the Puerto Rico authorities in circulars, notices or other guidance. Interestingly, the new PR Code does not provide for Roth-type contributions, nor pass-through of dividends from employee stock ownership plans.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McDermott Will & Emery | Attorney Advertising

Written by:


McDermott Will & Emery on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.