Puerto Rico Plans 2016 Plan Amendments and Compulsory Determination Letter Filings

Plan documents of retirement plans covering employees who are bona-fide residents of Puerto Rico, or who perform labor or services primarily within Puerto Rico, regardless of residence for other purposes (Puerto Rico Plans), must include the qualification provisions required by the Puerto Rico Internal Revenue Code of 2011 (PR Code). This requirement applies equally to plans that are intended to be qualified only in Puerto Rico (PR-Only Plans) and “Dual-Qualified Plans” (plans intended to be qualified under the U.S. Internal Revenue Code of 1986 (US Code) and the PR Code.

Contrary to the case under the US Code, the PR Code requires that all retirement plans intended to be qualified in Puerto Rico (both PR-Only and Dual-Qualified Plans) obtain a favorable determination letter from the Puerto Rico Treasury Department (PR Treasury) as to their tax qualified status under the PR Code. Although Puerto Rico Plans which are not intended to be qualified in the US are not subject to the qualification provisions of the US Code, such plans are subject to Title I of ERISA. Please see the attached memo for further information.