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15 January 2019

Puerto Rico’s Treasury Department announces qualified retirement plan limits for 2019

In Circular Letter 18-21, 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 beginning on or after 1 January 2019. Section 1081.01(h) of the PR Code requires the PRTD to report the applicable limits that are announced by the United States 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 1 January 2019, were released by the IRS in Notice 2018-83.

The following table shows the plan limitations for 2019, some of which slightly increased from those applicable for 2018:

Description
2018 Limit
2019 Limit

Defined benefit plan limit for annual benefits

PR Code Section 1081.01(a)(11)(A)(i)

$220,000

$225,000

Defined contribution plan limit for annual contributions

PR Code Section 1081.01(a)(11)(B)(i)

$55,000

$56,000

Annual limit on compensation

PR Code Section 1081.01(a)(12)

$275,000

$280,000

Annual limit on compensation

PR Code Section 1081.01(a)(12)

$275,000

$280,000

Highly compensated employee dollar threshold

PR Code Section 1081.01(d)(3)(E)(iii)(III)

$120,000

$125,000

Deferral limit — dual qualified plans & federal government retirement plan

PR Code Section 1081.01(d)(7)(A)(ii)

$18,500

$19,000

Dollar limitation for catch-up contributions for participants of federal government retirement plans

PR Code Section 1081.01(d)(7)(C)(v)

$6,000

$6,000

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

Implications

Plan sponsors and/or record-keepers of dual qualified plans and Puerto Rico-only qualified plans need to be aware of these limits to timely reflect the appropriate limitations in their systems for tax years beginning on or after 1 January 2019, and to properly assess and comply with applicable withholding and reporting obligations resulting from distributions from those plans.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Puerto Rico LLC, State and Local Taxation Group, San Juan
  • Pablo Hymovitz | pablo.hymovitz@ey.com
  • Rosa M. Rodríguez | rosa.rodriguez@ey.com
  • Pedro Mercado-Reyes | pedro.mercadoreyes@ey.com

ATTACHMENT

Document ID: 2019-5069

 
 

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