Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

January 26, 2023
2023-5104

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

_________________________________________

Endnotes

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

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more