In Notice 2012-6, the Internal Revenue Service (IRS) extends the deadline for a spin-off from a U.S.-qualified plan to a retirement plan qualified only in Puerto Rico to December 31, 2012 (potentially later for plans that participate in a U.S. group trust). The delayed deadline will give plan sponsors more time to decide whether to spin off benefits from a dual-qualified plan — a plan qualified in both the United States and Puerto Rico. The extension will also enable sponsors to evaluate forthcoming IRS guidance on whether a Puerto Rico plan can participate in a U.S. group trust arrangement, such as a master trust, before making their spin-off decision.
Separately, in early 2011, the Commonwealth of Puerto Rico made extensive changes to the tax qualification requirements for retirement plans covering Puerto Rican employees, which are generally effective in 2011 and 2012. In December 2011, the Commonwealth made several technical corrections to these qualification requirements. The Puerto Rico Treasury Department (Hacienda) subsequently issued Circular Letter No. 11-10, which establishes a deadline for amending Puerto Rico plans to comply with the tax code changes. Under the guidance, amendments must be adopted by the last day of the 2012 plan year and filed with the Hacienda by the date the sponsor's Puerto Rico 2012 income tax return is due (i.e., the 15th day of the fourth month after the close of the tax year or, if the sponsor obtains an extension, the 15th day of the seventh month).
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