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26 January 2023

Puerto Rico's Treasury Department announces qualified retirement plan limits for 2023

In Circular Letter 23-01, 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 2023. 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 2023, were released by the IRS in Notice 2022-55. See Tax Alert 2022-1635 for further details.

The following table shows the plan limitations for 2023, some of which slightly increased from those applicable for 2022:

Description

2022 Limit

2023 Limit

Defined benefit plan limit for annual benefits

  

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

$245,000

$265,000

Defined contribution plan limit for annual contributions

  

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

$61,000

$66,000

Annual limit on compensation

  

PR Code Section 1081.01(a)(12)

$305,000

$330,000

Highly compensated employee dollar threshold

  

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

$135,000

$150,000

Deferral limit — dual qualified plans & federal government retirement plan

  

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

$20,500

$22,500

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

  

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

$6,500

$7,500

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

_________________________________________

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

Ernst & Young Puerto Rico LLC, State and Local Taxation Group, San Juan

Rosa M. Rodríguez | rosa.rodriguez@ey.com

  • Pablo Hymovitz Cardona | pablo.hymovitz@ey.com

  • María T. Riollano | maria.riollano@ey.com

  • Alberto J. Rossy | alberto.rossy@ey.com

  • Alexandra M. Pérez | alexandra.perez@ey.com

  • Carla J Diaz | carla.j.diaz@ey.com

  • Karol I. Santiago | karol.santiago@ey.com

  • Marcel Ramos | marcel.ramos1@ey.com

  • Isabel Rivera | isabel.rivera@ey.com

  • Luz G. Rivera | luzgrycell.rivera@ey.com

    _________________________________________

    Endnotes

    1. The limit is $20,000 when the employee also contributes to an IRA.

    Document ID: 2023-5104

     
     

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