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Technical Amendments Bill Would Change Taxation of Puerto Rico Retirement Plan Distributions

"[S]ignificant amendments ... would be made by HB 2172 to the PR Code provisions on qualified retirement plans: [1] Plan distributions to Puerto Rico non-residents ... [2] Withholding tax provisions on plan distributions ... [3] Plan loan provisions."

Recent Legislation Impacts Puerto Rico Tax-Qualified Retirement Plans

"[S]ome of the main changes adopted by the Act include ... New maximum on contributions ... New definition of Highly Compensated Employee (HCE) ... New safe harbor for Cash or Deferred Arrangement (CODA) Plans ... Although the Act was effective immediately and, technically speaking, requires Puerto Rico qualified plans to adopt amendments incorporating its provisions ... PR Treasury officials informally instructed [practitioners] ... to wait before adopting and implementing the Act until PR Treasury examines the scope of the new qualification requirements and issues guidance regarding their implementation."

Plan Sponsors in Puerto Rico Required to File Restatements and Certain Amendments with Treasury (PDF)

"[S]ponsors of qualified retirement plans are required to adopt certain specific amendments to meet the new tax qualification requirements imposed by the P.R. Internal Revenue Code of 2011 ... Amendments must be adopted no later than June 30, 2013 (for plans using as plan year a calendar year) or the last day of the first plan year beginning on or after January 1, 2012 (for plans using as a plan year a year other than a calendar year)[.]"