Leading Authorities Discuss Puerto Rico Income Tax Overhaul and Impact on Employee Benefit Plans

ARLINGTON, Va., May 23, 2011 /PRNewswire-USNewswire/ -- A new Puerto Rico income tax code went into effect, January 1, 2011.  The new code made widespread changes, including expanding the income taxation of retirement benefits, imposing new limits on benefits and contributions, and setting due dates for completing plan filings with the Puerto Rico Department of the Treasury (commonly known as "Hacienda").  BNA Portfolio author Carlos Gonzales, who assisted Hacienda evaluate and draft the new rules, will be joined by Eugene Holmes of Proskauer Rose LLP in a new webinar from BNA Tax & Accounting, Employee Benefit Plans and the New Puerto Rico Tax Code: Retirement Plan Transfers Between U.S. and P.R. and More, May 25, in which they will discuss the rules in detail and address action items and alternatives companies should consider.  

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Gonzales and Holmes will focus on the technical aspects and practical considerations of transfers of participants, assets and liabilities from retirement plans qualified in the United States to retirement plans qualified in Puerto Rico. When properly planned and implemented, a transfer can result in a significant improvement of the retirement benefits of Puerto Rico employees at little cost to their employer. These transfers have to be completed by December 31, 2011. Companies interested in making a transfer need to start taking action as soon as possible. The presentation will address the pros and cons of qualified plan transfers, the profile of the companies that may benefit from them, the costs and the process for completing a transfer.

This webinar will cover recent developments and strategies for improving and controlling the costs of benefit programs in Puerto Rico, and will allow ample time for questions and answers.

• New Puerto Rico Rules on Qualified Retirement Plans
  • Background
    • Objectives and effective dates of new rules
    • Plans and employers subject to them
  • Changes to general plan qualification requirements
    • Nondiscrimination testing
    • Limits on annual benefits, contributions and compensation
  • New rules specific to 401(k) plans
    • Changes to ADP Test and local excise taxes on late correction of failed test
    • Increased limits on elective deferrals and catch-up contributions
  • Income taxation of retirement benefits of Puerto Rico employees
    • Expanded income tax withholding requirements
    • Special tax rules and tax-free rollovers
    • Local informative returns on distributions
    • Alternatives for avoiding potential liability for under-withholding and under-reporting
  • Revised limits on tax deduction for contributions to qualified plans
  • Process for qualifying plans with Hacienda
  • Action items and time frame for complying with new rules

• Transfers of United States Plans to Puerto Rico Plans
  • Background
    • Reasons for transfers
    • Technical aspects of transfers between United States and Puerto Rico plans
    • Profile of plan sponsors that may/may not benefit from transfers
  • Process for completing transfers
    • Compliance with U.S. tax requirements
    • Compliance with P.R. tax requirements
    • Cost and expenses associates with transfers
  • Open issues and practical considerations of transfers
    • Due date and time frame for completing transfers
    • Correction of  plan qualification failures identified during transfer process
    • Impact of failing to complete transfer on subsequent plan administration
    • Participation of Puerto Rico retirement plans in United States group trusts

• Other Recent Developments and Planning Opportunities
  • Implementation of United States benefit programs in Puerto Rico through Hacienda PLRs
  • Status of cafeteria plans and consumer driven healthcare in Puerto Rico
  • Development of officer pay and equity-based compensation programs in Puerto Rico
  • Risk management and cost control strategies particular to Puerto Rico plans

About the Speakers

Carlos Gonzalez is the President of BenefitsPuertoRico.com LLC, a law firm devoted to assisting U.S. and international companies with their employee benefits and executive compensation matters in Puerto Rico.  Carlos has over twenty years' experience as a tax, benefits and compensation professional, both in the United States and Puerto Rico.  He assists businesses with all aspects regarding the establishment, operation and termination of employee benefits and executive compensation programs in Puerto Rico, including the qualification of retirement plans with the Puerto Rico Department of the Treasury, the implementation of cost control and risk management strategies, and the handling of employee benefits claims, ERISA lawsuits and government audits and investigations.  Carlos is the author of the leading publication on retirement plans in Puerto Rico; 324 Tax Management, International Pension Planning – Puerto Rico, and is a professor on benefits and compensation at the University of Puerto Rico Law School.  He has served as an advisor to the Puerto Rico Department of the Treasury, the IRS and the United States Department of the Treasury on Puerto Rico qualified plan matters.  Carlos has a BBA with a major in accounting and a J.D. from the University of Puerto Rico, and an LLC in Taxation with an Employee Benefits Certificate from the Georgetown University Law Center.  He is a member of the Georgia, Puerto Rico and Washington DC bars and the Puerto Rico Society of Certified Public Accountants.

Eugene M. Holmes is a Senior Counsel in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center, resident in the Washington, D.C. office.  Eugene's practice focuses on a broad range of employee benefit issues, including counseling clients on all aspects of pension and health and welfare plan administration, mergers and acquisitions, reduction in force initiatives and government audits. He has extensive experience in issues relating to tax qualification of defined contribution and defined benefit retirement plans, employee benefit plan design and structure and participant communications.  Eugene works with a variety of national and international public and private companies. He has assisted clients with extensive employee benefit plan compliance reviews, plan design, compliance and termination issues related to corporate transactions and employee benefit plan restructuring and consolidation issues resulting from employer workforce change.  In addition, Eugene has written a number of articles and frequently lectures on various employee benefit issues.

Employee Benefit Plans and the New Puerto Rico Tax Code: Retirement Plan Transfers Between U.S. and P.R. and More takes place May 26, 2011, from 12:30 a.m. – 11:30 a.m., ET). To register for this webinar and obtain further information about CLE and CPE credits, go to http://www.bnatax.com/employee-benefits-puerto-rico-webinar/?open&cmpid=tmtxac2011 or (in the U.S.) call 1-800-372-1033, menu Option 6, then Option 1. The per site fee is $249.

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About BNA Tax & Accounting Webinars

BNA Tax & Accounting is the foremost source of tax and accounting research, news, practice tools, and guidance for tax attorneys, CPAs, corporate tax managers, estate planners, and financial accountants.  Designed for today's busy practitioners, our webinars offer the same expertise and relevance that are the hallmark of all BNA Tax & Accounting resources. In just 60-90 minutes, practitioners gain in-depth knowledge on a current tax or accounting topic from experts in that area — and benefit from practical applications that can be put to work immediately. Conference attendees have the opportunity to ask the speakers questions, and may be eligible to earn CLE or CPE credits — all from the convenience of their own office or conference room.

SOURCE BNA Tax & Accounting