Employee Moving to Puerto Rico

[khn]

A plan has a full-time employee who is moving to Puerto Rico. They have no other employees in Puerto Rico. They want to keep him, but do not want to get involved in having a dual-qualified plan. If the plan excludes leased employees, would it work if they fire him and rehire him as an independent contractor? It seems the only down side to that is he would be missing out on company match. Also if he becomes a terminated participant with a balance in the plan, would they still need to amend the plan to become dual-qualified in Puerto Rico?

[david rigby]

After the move, will he continue working for the same company?

If so, how will he be paid?

[khn]

They're thinking the employee will establish himself as an LLC and paid as a contractor.

[JRN]

Why not just amend the Plan to exclude residents of Puerto Rico?

[david rigby]

Assuming I understand what is the desired result, if the ER wants this EE to remain in the plan, could that be accomplished by paying him thru the current US company?

[movedon]

"Paying him as an independent contractor" does not make him an independent contractor. Assuming they want to continue treating him like an employee and don't want to deal with the Puerto Rican retirement plan rules, why not just exclude residents of Puerto Rico and then give him a raise to make him feel good about it?

[khn]

That is probably the route they should take, given what they want to accomplish. Essentially he'll be excluded from the plan and they will give him a raise or bonus to compensate for any missed employer match.

Thanks all for your insight.