Relief for Puerto Rico Plan Transfers and Governmental Retiree Benefit Plans


Notice 2012-6PDF, issued on December 19, 2011, expands and extends relief for certain trusts that hold the assets of or transfer assets to plans qualified under the Puerto Rico Code and for governmental retiree benefit plans.

Deadlines for transfers to ERISA Section 1022(i)(1) plans

Deadlines for plans to avoid taxable distribution treatment for asset transfers to Puerto Rico plans, as provided in Revenue Ruling 2011-1, are extended. Qualified plans that:

  • participated in a group trust on January 10, 2011, have until further notice to transfer assets to Puerto Rico trusts treated as tax-exempt under ERISA section 1022(i)(1). Any subsequent deadline would be described in future guidance.
  • benefit Puerto Rico residents, regardless of whether the plan participates in a group trust, may transfer assets to section 1022(i)(1) plans until December 31, 2012.

Without this relief, a transfer from a qualified plan to a Puerto Rico plan, including a plan treated as tax-exempt under ERISA section 1022(i)(1), would be treated as a taxable distribution (Revenue Ruling 2008-40PDF).

Expansion of relief to assets transferred from 81-100 group trusts

As permitted under earlier guidance, an 81-100 group trust can hold assets of a section 1022(i)(1) plan until further notice if the assets were received from a group trust and were held by a qualified plan in the transferor group trust on January 10, 2011. Notice 2012-6 extends this treatment to new section 1022(i)(1) plans created as a result of transfers allowed under the notice, as described above.

Governmental retiree benefit plans

The notice extends the deadline for certain IRC Code section 401(a)(24) governmental plans to amend their governing documents to comply with Revenue Ruling 2011-1 provisions about participating in an 81-100 group trust.

The extension applies to plans that:

  • provide retirement benefits, including retiree medical plans,
  • participate in a group trust, and
  • have a legislative body that meets in legislative session and has the authority to amend the plan.

The extended amendment deadline for these plans is the earlier of the:

  • close of the legislative body’s first regular legislative session that begins on or after January 1, 2012, or
  • January 1, 2015.