In Circular Letter 23-01, Puerto Rico's Treasury Department (PRTD) has announced the benefits and contribution limits for qualified retirement plans under Section 1081.01(a) of the Puerto Rico Internal Revenue Code of 2011, as amended (the PR Code), for tax years beginning on or after 1 January 2023. Section 1081.01(h) of the PR Code requires the PRTD to report the applicable limits that are announced by the United States Internal Revenue Service (IRS) and will apply to plans qualified under the PR Code.
The dollar limitations for qualified retirement and certain non-qualified plans that became effective 1 January 2023, were released by the IRS in Notice 2022-55. See EY Tax Alert, IRS releases the qualified retirement plan limitations for year 2023: 401(k) pretax limit increases to $22,500; catch-up limit rises to $7,500, dated 31 October 2022.
The following table shows the plan limitations for 2023, some of which slightly increased from those applicable for 2022:
| Description | 2022 Limit | 2023 Limit |
| Defined benefit plan limit for annual benefits | ||
| PR Code Section 1081.01(a)(11)(A)(i) | $245,000 | $265,000 |
| Defined contribution plan limit for annual contributions | ||
| PR Code Section 1081.01(a)(11)(B)(i) | $61,000 | $66,000 |
| Annual limit on compensation | ||
| PR Code Section 1081.01(a)(12) | $305,000 | $330,000 |
| Highly compensated employee dollar threshold | ||
| PR Code Section 1081.01(d)(3)(E)(iii)(III) | $135,000 | $150,000 |
| Deferral limit — dual qualified plans & federal government retirement plan | ||
| PR Code Section 1081.01(d)(7)(A)(ii) | $20,500 | $22,500 |
| Dollar limitation for catch-up contributions for participants of federal government retirement plans | ||
| PR Code Section 1081.01(d)(7)(C)(v) | $6,500 | $7,500 |
| Deferral Limit — PR only qualified plans | ||
| PR Code Section 1081.01(d)(7)(A)(i) | $15,000 | $15,000 |
| Dollar limitation for catch-up contributions for participants of PR only and dual qualified retirement plans | ||
| PR Code Section 1081.01(d)(7)(C)(i) | $1,500 | $1,500 |
| Participant after-tax contribution limit | ||
| PR Code Section 1081.01(a)(15) | 10% of participant's aggregate compensation for all years of participation in the plan | 10% of participant's aggregate compensation for all years of participation in the plan |
For additional information with respect to this Alert, please contact the following:
Ernst & Young Puerto Rico LLC, State and Local Taxation Group, San Juan
Rosa M. Rodríguez
Pablo Hymovitz Cardona
María T. Riollano
Alberto J. Rossy
Alexandra M. Pérez
Carla J Diaz
Karol I. Santiago
Marcel Ramos
Isabel Rivera
Noeliz Suarez
David Montañez
- Luz G. Rivera
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
