20 December 2017 Puerto Rico's Treasury Department announces qualified retirement plan limits for 2018 Puerto Rico's Treasury Department announces qualified retirement plan limits for 2018 In Tax Policy Circular Letter 17-02, Puerto Rico's Treasury Department (PRTD) has announced the benefits and contribution limits for qualified retirement plans under Section 1081.01(a) of the Puerto Rico Internal Revenue Code of 2011, as amended (the PR Code) for tax years that begin on or after January 1, 2018. Section 1081.01(h) of the PR Code requires the PRTD to report the applicable limits announced by the US Internal Revenue Service (IRS) that will apply to plans qualified under the PR Code. The dollar limitations for qualified retirement and certain non-qualified plans that become effective January 1, 2018, were released by the IRS in Notice 2017-64. See Tax Alert 2017-1747 for further details. The following table shows the plan limitations for 2018 some of which slightly increased from th/ose applicable for 2017: Description | 2017 Limit | 2018 Limit | Defined benefit plan limit for annual benefits PR Code Section 1081.01(a)(11)(A)(i) | $215,000 | $220,000 | Defined contribution plan limit for annual contributions PR Code Section 1081.01(a)(11)(B)(i) | $54,000 | $55,000 | Annual limit on compensation PR Code Section 1081.01(a)(12) | $270,000 | $275,000 | Highly compensated employee dollar threshold PR Code Section 1081.01(d)(3)(E)(iii)(IV) | $120,000 | $120,000 | Deferral limit — dual qualified plans1 & federal government retirement plan PR Code Section 1081.01(d)(7)(A)(ii) | $18,000 | $18,500 | Dollar limitation for catch-up contributions for participants of federal government retirement plans PR Code Section 1081.01(d)(7)(C)(i) | $6,000 | $6,000 | Deferral Limit — PR only qualified plans2 PR Code Section 1081.01(d)(7)(A)(i) | $15,000 | $15,000 | Dollar limitation for catch-up contributions for participants of PR only and dual qualified retirement plans PR Code Section 1081.01(d)(7)(C)(i) | $1,500 | $1,500 | Participant after-tax contribution limit PR Code Section 1081.01(a)(15) | 10% of participant's aggregate compensation for all years of participation in the plan | 10% of participant's aggregate compensation for all years of participation in the plan |
Plan sponsors and / or record-keepers of dual qualified plans and Puerto Rico-only qualified plans need to be aware of these limits in order to timely reflect the appropriate limitations in their systems for tax years that begin on or after January 1, 2018, and to properly assess and comply with applicable withholding and reporting obligations resulting from distributions from those plans. Contact Information
For additional information concerning this Alert, please contact:
| State and Local Taxation Group | | • Pedro Mercado-Reyes | (787) 772-7177 | | • Rosa M. Rodríguez | (787) 772-7062 |
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1 Dual qualified plan — Plan qualified under both the PR Code and the US Internal Revenue Code of 1986, as amended. 2 PR only qualified plan — Plan qualified under the PR Code only. Document ID: 2017-2158 |
