03 March 2026 Puerto Rico's Treasury Department announces qualified retirement plan limits for 2026 - Circular Letter 26-03 outlines updates to qualified retirement plans under the Puerto Rico Internal Revenue Code.
- The changes are effective January 1, 2026.
- The defined benefit plan limit increased from $280,000 to $290,000, while the defined contribution plan limit increased from $70,000 to $72,000.
- Taxpayers should consider reviewing their contributions in light of the new limits.
| |
In Circular Letter 26-03, Puerto Rico's Treasury Department (PRTD) announced the benefit 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). These limits apply to tax years beginning on or after January 1, 2026. Additionally, Section 1081.01(h) of the PR Code requires the PRTD to report the applicable limits that are announced by the US Internal Revenue Service (IRS) and will apply to plans qualified under the PR Code. The dollar limitations for qualified retirement and certain non-qualified plans that became effective January 1, 2026, were released by the IRS in Notice 2025-67. See Tax Alert 2025-2287 for further details. The following table shows the plan limitations for 2026, some of which slightly increased from those applicable for 2025: Description | 2025 limit | 2026 limit | Defined benefit plan limit for annual benefits PR Code Section 1081.01(a)(11)(A)(i) | $280,000 | $290,000 | Defined contribution plan limit for annual contributions PR Code Section 1081.01(a)(11)(B)(i) | $70,000 | $72,000 | Annual limit on compensation PR Code Section 1081.01(a)(12) | $350,000 | $360,000 | Highly-compensated-employee-dollar threshold PR Code Section 1081.01(d)(3)(E)(iii) | $160,000 | $160,000 | Deferral limit — dual qualified plans & federal government retirement plan1 PR Code Section 1081.01(d)(7)(A)(ii) | $23,500 | $24,500 | Dollar limitation for catch-up contributions for participants of federal government retirement plans PR Code Section 1081.01(d)(7)(C)(v) | $7,500 | $8,000 | Deferral limit — PR-only qualified plans 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 |
| * * * * * * * * * * |
Endnote1 The limit is $22,500 when the employee also contributes to an IRA. | | * * * * * * * * * * | | Contact Information | For additional information concerning this Alert, please contact: State and Local Taxation Group Workforce Tax Services - Employment Tax Advisory Services | | Published by NTD’s Tax Technical Knowledge Services group; Jennifer Mannetta, legal editor |
Document ID: 2026-0555 |
