The Treasury of Puerto Rico has released Form 480.7C, Informative Return – Retirement Plans and Annuities.
Form 480.7C must be prepared for each participant or beneficiary of a retirement plan or annuity who, during Tax Year 2018, received a distribution of income from annuities or pensions from qualified or non-qualified plans under Section 1081.01 of the Puerto Rico Internal Revenue Code of 2011, as amended, or from the retirement systems subsidized by the Government of Puerto Rico, the United States, or instrumentalities or political subdivisions thereof. Additionally, this form must be prepared for every person receiving payments from fixed or variable Annuity Contracts. This form must also be used to inform eligible distributions made for Reason of Extreme Economic Emergency Due to Hurricane María.
Changes to 480.7C
- New field added for Exempt Income: Box 20
- Subsequent boxes renumbered
Instructions for Payer
- In cases where plan administrator is not making the payments, payer must include information of the paying agent
- For Name of Plan – In cases where there is no trust, must include the name that identifies the plan
- Additional Administrative Determinations relative to reporting this income (AD 18-02); (AD 18-13)
- Box 6 Instructions: New distribution code added for Box 23 (E – Plan Termination)
- Box 7 Instructions: Applies now to tax withheld on total distributions to participants or beneficiaries due to separation from service or plan termination
- New distribution code added for Box 23 (E – Plan Termination)
- Box 14 Instructions: Change in withholding rate from “20% or 29%” to “10% or 20%”
- If trust meets requirements under clauses Unable to render embedded object: File (/images/icons/emoticons/information.png) not found. and (ii), subparagraph (A), Section 1081.01(b)(1) of the Code, tax withheld will be 10%
- In case of other distributions, such as partial distributions after separation from service, withdrawals made before or as a result of (in cases of annuity or periodic payments distributions) separation from service, tax withheld will be 10%
- For corresponding distribution codes, refer to instructions for boxes 5, 6, and 7.
- Box 16 Instructions: Amount must be equal to the sum of amounts reported in Boxes 17, 18, 19, 20 (this previously did not include 20)
- Box 17 instructions: For a lump-sum distribution, do not include the portion of the distribution that constitutes exempt income. In these cases, the after-tax contributions must be reported in box 19, any amounts over which the tax was prepaid must be reported in box 18, and the amount attributed to exempt income must be reported in box 20.
- In cases of periodic payments from qualified or government retirement plans, the amounts in this box must be the same as that report in box 16, as long as no amounts are indicated in boxes 18, 19, and 20.
- In cases of distributions from qualified profit-sharing stock bonus plans due to a dismissal, you must include zero in this box and it must be reported in box 20
- Box 20: Instructions added for completing this new field (Exempt Income)
- Box 21 Instructions: For the definition of eligible distributions – eligible period has been extended to November 30, 2018.
- Box 21B Instructions: In cases of eligible distributions made between July 1 and July 30, 2018, for which the taxes have been withheld at source from total amount distributed, this box must include the total eligible distribution paid to the participant and no portion must be reported in box 21A. Include total withholding in box 22.
- Box 22 Instructions: Eligible distributions period changed to “January 1, 2018 to November 30, 2018”
- This box must include total amount withheld at source made at the moment of distribution for eligible distributions between July 1 and July 30, 2018, for which the withholding greater than the 10% established has been made
- Box 23 Instructions: This box may include to distribution codes for those cases in which, in addition to code N, any taxable distributions are also included in boxes 16 – 20.
Instructions for Payee
- Box 6 Instructions: New distribution code added for Box 23 (E – Plan Termination)
- Box 7 Instructions: New distribution code added for Box 23 (E – Plan Termination)
- Boxes 16 – 17 Instructions: New distribution code added for Box 23 (D – Disability)
- Box 17 Instructions: Rule 3 – now applies to when “total” option is checked rather than “lump sum” in the Form of Distribution box
- Box 20: Instructions added for completing this new field (Exempt Income)
- Box 21 Instructions: For the definition of eligible distributions – the eligible period has been extended to November 30, 2018.
- Box 22 Instructions: Transfer amount to Schedule F Individual, Part VI, line 11(b) (this was previously line 6(b))
