Practical Considerations & Recommendations on Puerto Rico’s 2014 Tax Prepayments on Retirement Benefits

In a desperate attempt to raise revenues and, hopefully, avoid bankruptcy, during the 2014 the government of Puerto Rico allowed local taxpayers to prepay at favorable rates income taxes on their retirement plan accounts (i.e., accelerate the payment of taxes on distributed amounts). This initiative, which this article describes, ended up failing, created a host of plan administration issues, and should not be repeated. And, yes, the local government went bankrupt during 2016.