Puerto Rico Guidance on Retirement Plan Qualification Letters

On Dec. 23, 2016, the Puerto Rico Department of the Treasury issued Tax Policy Circular Letter No. 16-08 (“Circular Letter”) establishing new rules regarding the validity of retirement plan qualification letters. Additionally, the Circular Letter establishes procedures that employers and service providers must follow to request such qualification letters.

As background, plan documents of retirement plans qualified only in Puerto Rico, and for plans qualified both in Puerto Rico and the U.S., must include the qualification provisions required by the Puerto Rico Code. The Puerto Rico Code requires that all retirement plans intended to be qualified in Puerto Rico apply for and obtain a favorable determination letter from the Puerto Rico Treasury as to their tax qualified status. Tax Policy Circular Letter No. 16-08 serves as a singular source of information regarding the qualification of retirement plans under the Puerto Rico Code.

Specifically, the Circular Letter provides guidance relative to the validity of retirement plan qualification letters, clearly outlines what constitutes a qualification amendment, provides updated information about deadlines to request qualification letters, adds additional requirements to the documentation that must be submitted with any request for a qualification letter and provides information about the required filing fees for both retroactive and regular qualification requests.

The Circular Letter is effective as of Dec, 23, 2016. Employers that sponsor qualified retirement plans in Puerto Rico should familiarize themselves with the new guidance.

Tax Policy Circular Letter No. 16-08 (in Spanish) »