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Employee Benefits in Puerto Rico – 2013 Update


Product Code - TMW87
Speaker(s): Carlos Gonzalez, President, BenefitsPuertoRico.com LLC, San Juan, P.R.; Eugene M. Holmes, Senior Counsel, Proskauer Rose LLP, Washington, DC; Angel R. Marzan, Assistant Secretary of Internal Revenue, Puerto Rico Department of the Treasury, San Juan, P.R.
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Join us for a 90-minute conversation on the latest and upcoming developments, challenges and opportunities regarding the establishment and operation of retirement plans and other employee benefit programs in Puerto Rico. This webinar will provide you with a detailed description of the Dos and Don’ts of filing retirement plans with the Puerto Rico Department of the Treasury (“Hacienda”). All retirement plans that cover Puerto Rico participants are required to be filed with Hacienda, most likely by the end of this year, to request either a new or an updated determination letter concerning their qualification under the Puerto Rico Internal Revenue Code of 2011 (the “PRIRC”). With about 5,000 of such plan filings already completed, employee benefits practitioners and Hacienda officers have developed a set of best practices and things to do and things avoid as part of these filings. If your company’s or your client’s retirement plans still need to be filed with Hacienda, you will certainly benefit from this discussion.

We will also address the main aspects of Hacienda’s new regulations under PRIRC §1081.01(b), which were just issued on January 9, 2013, regarding the Puerto Rico taxation of retirement income, and will provide particular emphasis to how these regulations may impact the administration of the retirement plans of those United States and international companies operating on the Island.

Angel R. Marzan, the Assistant Secretary of Hacienda’s Internal Revenue Area, which is the office within Hacienda with direct authority over the qualification of retirement plans in Puerto Rico, will be a guest speaker in this webinar. He will give us an overview of Hacienda’s current initiatives regarding the supervision of retirement plans, including the continued development of the joint IRS/Hacienda plan audits initiative, and will address possible improvements to the local tax rules on employee benefits.

Finally, the webinar will cover several aspects of the local and United States regulation of healthcare and other welfare benefit plans in Puerto Rico, such as recent rulings by the Puerto Rico Supreme Court and the United States federal courts on the income and FICA taxation of severance pay, the applicability of the healthcare reform in Puerto Rico, best practices on HIPAA compliance, and findings and lessons learned about the implementation of the ERISA §408(b)(2) rules in Puerto Rico.

Agenda

I. Retirement Plan Filings with Hacienda

  • Plans that need to be filed
  • Filing due dates
  • Documents & information to be included in the filings
  • Payment of Hacienda filing fees
  • Required and optional PRIRC Amendments to the plan
  • Pros and cons of retroactive qualifications
  • Frequent problem areas
  • Hacienda’s evaluation process

II. Puerto Rico Taxation of Retirement Income

  • Local taxation of lump sum distributions, annuities & installments, and other forms of payment
  • Interplay with equivalent U.S. tax rules applicable to dual-qualified plans
  • Rules on the withholding Puerto Rico income tax at source
  • Process for reporting distributions to, and depositing taxes with, Hacienda
  • Statutory penalties for noncompliance and alternatives for voluntary corrections
  • Current status on compliance with PRIRC tax rules by United States and Puerto Rico providers

III. IRS & Hacienda Supervision of Retirement Plans in Puerto Rico

  • Plan audits; what has been done and what is in the pipeline
  • IRS and Hacienda public policy objectives behind plan audits
  • Current status of U.S.-to-P.R. plan transfers under Rev. Rul. 2008-40

IV. Regulation of Welfare Plans

  • Final rules on income & FICA taxation on severance and RIF payments
  • Application and lessons learned on the application of the Affordable Care Act, HIPAA, and the ERISA §408(b)(2) regulations in Puerto Rico

V. Questions & Answers

Who Should Attend?

  • H.R., Benefits and Compensation, and Tax officials of United States and international companies with operations in Puerto Rico
  • Record-keepers and third party administrators of plans covering Puerto Rico participants
  • Benefits and compensation practitioners servicing those companies and their service providers

Educational Objectives

Upon completion of this webinar, participants will be able to:

  • Understand the actions that need to be taken by the end of this year in order to keep a retirement plan duly qualified in Puerto Rico and be aware of related problem areas.
  • Understand the basic rules and interplay of U.S. and Puerto Rico taxation of retirement income and the potential tax risk that may arise when the rules are not properly followed.
  • Become familiar with the IRS and Hacienda efforts on the supervision of retirement plans on the Island.
  • Keep abreast of recent developments on the operation of welfare plans in Puerto Rico.

Requirements & Education Credits

Prerequisites: None
Level: Basic to Intermediate
Delivery Method: Group Interactive live webcast
CPE/CLE Credits: 1.5 credits

Carlos Gonzalez, President, BenefitsPuertoRico.com LLC, San Juan, P.R.; Eugene M. Holmes, Senior Counsel, Proskauer Rose LLP, Washington, DC; Angel R. Marzan, Assistant Secretary of Internal Revenue, Puerto Rico Department of the Treasury, San Juan, P.R.

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, qualification, operation and termination of employee benefits and executive compensation programs in Puerto Rico. 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 and the IRS 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 a Tax LLM from Georgetown University, and is a member of the Georgia, Puerto Rico and Washington DC bars.

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. 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.

Angel R. Marzan is the Assistant Secretary of the Internal Revenue Area of the Puerto Rico Department of the Treasury (“Hacienda”), which is the office within Hacienda with direct authority over the qualification and supervision of qualified and nonqualified retirement plans on the Island. Among his duties, Angel is responsible for evaluating, approving or rejecting taxpayers’ and practitioners’ requests for private letter rulings, closing agreements and other administrative guidance regarding retirement plans. Angel is also Hacienda’s highest ranking officer participating in the inter-agency initiative with the IRS regarding the audit of dual-qualified and P.R.-only qualified plans. Prior to joining Hacienda, Angel was in private practice assisting U.S. and local companies with tax and labor & employment matters in P.R. He was a law degree from the University of Puerto Rico and a Tax LLM from Georgetown University.