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Puerto Rico Government Plan-to-Private Plan Rollovers Allowed | Ogletree, Deakins, Nash, Smoak & Stewart, P.C.


On January 20, 2021, the Puerto Rico Department of the Treasury (
Departamento de Hacienda, commonly known as “Hacienda”) issued Administrative Determination No. 21-01 (AD 21-01), which provides that lump-sum distributions from the retirement plan for Puerto Rico government employees are eligible for direct and indirect rollovers into Puerto Rico–qualified retirement plans maintained by private-sector employers. In practice, however, this determination is unlikely to have much of an impact on the operation of private-sector employer plans.
Background
Since the 1940s, Puerto Rico government employees have been covered by contributory-defined benefit and hybrid pension plans. In 2017, the local government transferred all its employees to a new defined contribution savings plan comparable to the 401(k) plans sponsored by private-sector employers. Previously, distributions from local government plans were ineligible for tax-free rollovers into private-sector employer ....

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