Puerto Rico Compensation

I am working with a plan that defines plan compensation as 3401(a) compensation. The plan covers a couple of Puerto Rican residents/participants. Their compensation is reported to Hacienda. Does this compensation constitute 3401(a) compensation? We're trying to do some clean-up and want to determine if we have an issue on the U.S. side.

Thanks to any who can help!

Dog

We're working on something similar and I'm thinking that comp is not plan comp for a US plan.  Will let you know if we learn otherwise.

Thanks, Bird! I was leaning in the other direction but it sure is difficult to find something on point.

We asked our document provider, FTW, and were told that our plans definitely do not qualify as Puerto Rico qualified plans.  At least for deferrals, they would NOT get the benefit of a pre-tax deduction for income reported to Hacienda.  I have to believe any/all of that income is not US income and not eligible for any US plan purposes.

What is Hacienda? 

It is PR's IRS. 

I spoke with an attorney in Puerto Rico and he agrees with Bird on the compensation issue. However, that doesn't make it any easier to fix (this has been going on for years).