McDermott Will & Emery (JD Supra Puerto Rico)

Puerto Rico enacted new legislation in February that will require changes to tax-qualified retirement plans covering Puerto Rico employees, including both Puerto Rico-only and dual-qualified (US and Puerto Rico) retirement plans. Act No. 9-2017 revises a number of Puerto Rico qualified retirement plan rules including contribution limits, rules related to nondiscrimination testing and employer...

WHAT HAPPENED: ..The DOJ Antitrust Division scored another trial win — this time in a real estate foreclosure bid rigging case...

The U.S. Internal Revenue Service (IRS) recently issued Revenue Ruling 2014-24, which expressly permits retirement plans that are tax qualified only in Puerto Rico (Puerto Rico-only plans) to continue to pool assets with U.S.-qualified plans in Revenue Ruling 81-100 group trusts (group trusts) now and in the future. The ruling is welcome relief for Puerto Rico plan sponsors, institutional...

On July 1, 2014, Puerto Rico adopted new legislation (Tax Act 77), which provides a window from July 1, 2014 – October 31, 2014, for participants in Puerto Rico retirement plans to prepay at reduced rates Puerto Rico income tax on the value of accrued benefits. On August 6, the Puerto Rico Treasury Department issued guidance on the prepayment option via Administrative Determination No. 14-16.

Employers that sponsor defined benefit qualified retirement plans benefiting only Puerto Rico employees should be aware that Pension Benefit Guaranty Corporation (PBGC) coverage may no longer apply. Last year, the PBGC withdrew old prior opinion letters (Opinion Letters 77-172 and 85-19) regarding PBGC coverage in Puerto Rico and Guam. Those opinion letters articulated the PBGC’s position at...

On December 6, 2013, Frank Peake, former president of Sea Star Line LLC, was sentenced to five years in prison and ordered to pay a $25,000 fine for his role in fixing prices for rates and surcharges for freight transportation in coastal waters between the United States and Puerto Rico. The alleged conduct began around late 2005 and continued until at least April 2008.

The Puerto Rico Treasury Department recently issued Circular Letter No. 13-02, extending the deadline for employers that sponsor qualified retirement plans benefiting Puerto Rico employees to adopt amendments and file for determination letters on the qualified status of their plans under the 2011 Puerto Rico tax code.

Puerto Rico and U.S. laws affecting retirement plans have changed extensively in the last few years. Puerto Rico adopted a new tax code in 2011, and both the U.S. and Puerto Rico Treasury Departments issued a number of rulings that have a significant impact on employers that sponsor retirement plans benefiting Puerto Rico employees. Action is required on many of these changes by the end of 2012

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...

A temporary excise tax recently enacted in Puerto Rico will have a significant impact on U.S.-based multinational groups conducting, or considering conducting, manufacturing activities in Puerto Rico. Companies should consider the creditability of the excise tax for U.S. purposes and, even if the excise tax is creditable, whether their current organizational structure allows them to fully utilize