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If you have any questions in regards to the above, please do not hesitate to contact our offices so that we may explain the amendments to the provisions of the Code in more detail. Our address is:

 

Fiddler González & Rodríguez, P.S.C., P.O. Box 363507, San Juan, PR 00936-3507. Our fax (787) 759-3108.

 

We welcome your questions and comments.


José J. Santiago

787-759-3129

jsantiag@fgrlaw.com

 

Carlos A. Padilla

787-759-3149

cpadilla@fgrlaw.com

 

Antonio L. García

787-759-3221

agarcia@fgrlaw.com

 

Edgardo Barreto

787-759-3170

ebarreto@fgrlaw.com

 

 

 

 

ACT NO. 238 OF DECEMBER 22, 2014 EXTENDS PERIOD TO PREPAY TAXES FROM RETIREMENT PLANS

 

On December 22, 2014 Governor Alejandro García Padilla signed into law P. del S. 1189. Among other provisions, Act No. 238:

 

  • extends the period to prepay taxes applicable to balances held under qualified retirement plans at a special rate of 8% until January 31, 2015;
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  • applies the special tax rate to the taxable portion of all distributions from qualified retirement plans that are paid from July 1, 2014 to January 31, 2015 as a result of the plan termination or as a result of a termination of employment;
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  • allows tax prepayments from retirement plans that provide for such type of distribution;
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  • requires that tax prepayment distributions must be included as a “distribution not subject to income tax” in the participant’s 2014 tax return; and
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  • provides that plans can be amended to allow for distributions of tax prepayments paid out of the trust attached to the qualified plan, subject to rules and limitations applicable to retirement plans, including but not limited to the U.S. Internal Revenue Code of 1986 and ERISA;
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  • requires that amendments to qualified retirement plans allowing for distributions of tax prepayments paid out of the trust attached to the plan must specify that the paying agent shall issue the payments to “Secretario de Hacienda”.

 

It is worth mentioning that, although Article 4(b)(1) of Act No. 238 provides that tax prepayment distributions shall be included in the 2014 tax return of the participant, it is not clear whether tax prepayment distributions processed during the month of January 2015 shall be included in the 2014 or the 2015 individual tax return.

 

©2016 Fiddler, González & Rodríguez, P.S.C. This Watch has been prepared by Fiddler, González & Rodríguez, P.S.C. for informational purposes only and does not constitute legal advice. This information does not create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers. Fiddler, González & Rodríguez, P.S.C. and its members assume no responsibility to inform you of additional changes in law or any other legal issues related to the matters discussed in this e-mail.

 

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