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
Carlos A. Padilla
Antonio L. García
Vol. 2016, No.3 March 21, 2016
EMPLOYEE BENEFITS UPDATE
FIRST CIRCUIT ISSUES OPINION ON STATUTE OF LIMITATIONS FOR ERISA CLAIMS IN PUERTO RICO
In Santana v. Metropolitan Life Insurance, 2016 WL 963830 (March 14, 2016) the U.S. Court of Appeals for the First Circuit held that an ERISA claim was not time-barred because the plan administrator had violated its regulatory obligation to inform the claimant of the time period for filing suit in the denial of benefits letter. The Court explained that ERISA requires a plan administrator to inform a claimant in its denial of benefits letter not only of his right to bring a civil action, but also the plan-imposed time limit for doing so. The failure to include this information rendered the plan’s limitations period inapplicable.
Because ERISA itself does not contain a statute of limitations for bringing a civil action, federal courts usually borrow the most closely analogous statute of limitations in the forum state. In this case, the Court applied Puerto Rico's default fifteen-year statute of limitations for contract claims since an ERISA claim to recover benefits arises out of a contract between an employer and its employees.
Plan sponsors should consider amending their plans’ claims procedure to adopt a shorter statute of limitations and incorporating language into the plan’s claim communications informing the participants in order to avoid a default fifteen-year statute of limitations for ERISA claims.
The opinion may be accessed through the following link: http://media.ca1.uscourts.gov/pdf.opinions/15-1273P-01A.pdf
PUERTO RICO TREASURY DEPARTMENT ISSUED ADMINISTRATIVE
DETERMINATION NO. 16-05
On March 11, 2016, the Treasury Department issued Administrative Determination No. 16-05 eliminating reporting requirements for certain retirement plans. Administrative Determination No. 16-05 also repealed Circular Letter No. 12-02 (February 13, 2012) which had established the rules to allow sponsoring employers that maintain retirement plans subject to ERISA and qualified in Puerto Rico to comply with the requirement to file an annual return by filing either Form 480.7 (OE) or IRS/DOL Form 5500 or 5500-SF with the Department.
Under Administrative Determination No. 16-05, trusts attached to employee pension plans qualified in Puerto Rico ("Retirement Plan") established or adopted by employers subject to filing of income tax returns in Puerto Rico and who complete and file Form SC 6042, (Deduction for Contributions to Qualified Retirement Plans and Tax for Certain Contributions – Form SC 6042), along with their income tax return for Puerto Rico, are exempt from the requirement of filing Form 480.7 (OE). The repeal is effective for tax year beginning after December 31, 2014. Based on the preceding, Form 480.7 (OE) will not be filed with the Treasury Department by exempt Retirement Plans beginning on or after January 1, 2015. Retirement Plans sponsored by employers that do not meet the aforementioned requirements will have to file Form SC 6042.
If you have any questions on these matters, please do not hesitate to contact us.
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