Puerto Rico's Treasury Department announces qualified retirement plan limits for 2023

Local contact

EY Global

27 Jan 2023
Subject Tax Alert
Categories Corporate Tax
Jurisdictions Puerto Rico

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.