On November 8, 2017, the Governor of Puerto Rico signed Executive Order No. 2017-067 (“EO 2017-067”) authorizing the Secretary of the Department of the Treasury (the “PR Treasury”) to establish tax rules for distributions from qualified retirement plans and individual retirement accounts following Hurricane María and other natural disasters. Under EO 2017-067, the PR Treasury must create:
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Tax rules applicable to distributions from qualified retirement plans and individual retirement accounts (“IRAs”) that are disbursed following Hurricane María or any disaster declared by executive order (“Eligible Distributions”).
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Rules on responsibilities imposed to trustees, administrators and service providers of retirement plans and IRAs in connection with compliance with their tax withholding responsibilities as the paying agent in Eligible Distributions.
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Rules applicable to loans taken from participants in a retirement plan. It is expected there will be an extension of time to repay plan loans.
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Preferential tax rates for Puerto Rico residents who make Eligible Distributions from retirement plans and IRAs.
Although the Governor of Puerto Rico has provided general information through the radio and local newspapers in connection with the tax treatment of Eligible Distributions1 as a result of EO 2017-067, the Puerto Rico Treasury has not yet issued any official guidance in connection with this matter.
We expect guidance from the PR Treasury soon, and any guidance in connection with Eligible Distributions from retirement plans and IRAs, as well as guidance on plan loans, will be reported as soon as it becomes available.
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