Puerto Rico Treasury Department Notifies the 2019 Cost-of-Living Adjustments for Retirement Plans
As required by Section 1081.01(h) of the Puerto Rico Internal Revenue Code of 2011, as amended (the “PR Code”), the Puerto Rico Treasury Department (“PR Treasury”) recently issued Circular Letter of Internal Revenue No. 18-21 (“CL IR 18-21”) with the applicable 2019 dollar limits for Puerto Rico qualified retirement plans, following the recent announcement by the Internal Revenue Service (“IRS”) in IRS Notice 2018-83 with respect to United States tax qualified retirement plans. The Puerto Rico limitations are generally applicable to tax qualified plans under Section 1081.01 of the PR Code. Some of the key limits for Tax years 2018 and 2019 are as follows with changes highlighted in Bold:
2018 2019
Annual Benefit Limitation for Defined Benefit Plans $220,000 $225,000
Annual Contribution Limitation for Defined Contribution Plans $55,000 $56,000
Annual Compensation Limit $275,000 $280,000
Highly Compensated Employee Threshold $120,000 * $125,000 *
Elective Deferrals – Puerto Rico Only Qualified Plans $15,000 $15,000
Catch-up Contribution – PR and Dual Qualified plans with cash or deferred arrangements $1,500 $1,500
Elective Deferrals Limit – Dual Qualified Plans and Federal Government Thrift Savings Plan $18,500 $19,000
Catch-up Contributions – Federal Government Thrift Savings Plan $6,000 $6,000
Voluntary (i.e., after-tax) Contribution Limitation 10% of Compensation since being plan participant
* Act No. 9-2017 amended the PR Code, among other, to modify the definition of highly compensated employee (“HCE”) by increasing the HCE compensation threshold from $120,000 to $150,000. However Act 257-2018 eliminated this provision and restated the tie in to the limits under Section 414(q)(1)(B) of the United States Internal Revenue Code of 1986, as amended.
