Puerto Rico Treasury extends hurricane relief for distributions and loans to retirement plan participants

September 5, 2018
| Puerto Rico, United States
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By Stephen Douglas and Russ Hall 

In Administrative Determination No. 18-13 (AD 18-13), Puerto Rico’s Treasury Department (Hacienda) extends the special relief for distributions and loans from retirement plans for those affected by Hurricane Maria to November 30, 2018. (See Hurricane relief for distributions and loans to participants in Puerto Rico retirement plans, Willis Towers Watson Insider, January 2018.) The relief was originally scheduled to expire after June 30. 

Briefly, the relief reduces the taxes on distributions from qualified retirement plans and relaxes some of the rules for plan loans. Aside from extending the deadline of the original relief and addressing some associated issues, Hacienda has made no other substantive changes.

As these relief provisions are optional, sponsors of Puerto Rico qualified plans and dual-qualified plans that made the original relief available must now decide whether to extend it (unless plan provisions adopted earlier made the extension automatic). While not stated explicitly, the guidance might be read to allow sponsors who did not offer relief to participants to do so now solely for the extended period. 

Participants and sponsors that wish to apply the relief retroactively to July 1, 2018, may have to take certain extra steps (explained in AD 18-13).   

Plan terms will need to accurately reflect any Hurricane Maria relief provided under the plan. Any necessary plan amendments must still be made by December 31, 2018.