ARTICLE · 21 MARCH 2011

Retirement Plans Impacted By New Puerto Rico Internal Revenue Code

McConnell Valdés LLC

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Act No. 1 of January 31, 2011 establishes a new Puerto Rico Internal Revenue Code ("2011 Code") and repeals the Puerto Rico Internal Revenue Code of 1994, as amended ("1994 Code") almost in its entirety.

Puerto RicoTax

Juan Luis Alonso

Act No. 1 of January 31, 2011 establishes a new Puerto Rico Internal Revenue Code ("2011 Code") and repeals the Puerto Rico Internal Revenue Code of 1994, as amended ("1994 Code") almost in its entirety. Section 1081.01 of the 2011 Code (former Section 1165) contains new rules governing retirement plans intended to be qualified in Puerto Rico, many of which track similar provisions in the U.S. Internal Revenue Code of 1986, as amended ("US Code").

Section 1081.01 is generally effective January 1, 2011, although some provisions will be effective for taxable years beginning on or after January 1, 2012.

Among the most significant changes are the following:

Qualification Requirements – Section 1081.01(a) (former Section 1165(a)):

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