Popular, Inc. · NASDAQ:BPOP
Popular — Investor Presentation (October 2024)
27 slides from Popular's investor presentation, Oct 17, 2024
Slide 1: ERISA and Other Regulatory Considerations for Retirement Plans in Puerto Rico
ERISA AND OTHER REGULATORY CONSIDERATIONS FOR RETIREMENT PLANS IN PUERTO RICO October 17, 2024 Gisela E. Sánchez Alemán, Esq. Ferraiuoli LLC American International Plaza 250 Muñoz Rivera Avenue, 6th Floor San Juan, Puerto Rico 00918 (787) 766-7000 – Ext. 397 gsanchez@ferraiuoli.com
Slide 2: Disclaimer
Disclaimer The contents of this presentation have been prepared for educational purposes only. This presentation is not intended as, and does not constitute, legal advice. Anyone reading this presentation is advised to obtain legal advice from their attorney or financial advisor, as applicable, befo
Slide 3: Outline of Presentation
Outline of Presentation • Overview of the Employee Retirement Income Security Act of 1974 (ERISA) Considerations. • Useful considerations for protecting retirement plan assets. • Overview of ownership considerations on retirement plans in Puerto Rico (PR). • Recent legislative and regulatory develop
Slide 4: Most Important Statutory and Regulatory Provisions for Puerto Rico Retirement Plans
Most Important Statutory and Regulatory Provisions for Puerto Rico Retirement Plans • PR Code* Section 1081.01 – qualified plan rules and beneficiary taxation. • PR Code Section 1033.09 – employer deduction rules. • PR Treasury Regulation 5678 under the PR Internal Revenue Code of 1994. • PR Treasur
Slide 5: ERISA Considerations of Retirement Plans
ERISA Considerations of Retirement Plans • ERISA regulates the administration of certain benefit plans offered by employers to their employees. • Plans covered by ERISA: • pension plans; and • welfare plans. 5
Slide 6: ERISA Applicability
ERISA Applicability • A plan, fund or program maintained by an employer or organization of employees is considered a “pension” plan under ERISA if it: o provides retirement income to employees; or o is deferred income by the employee for a period of time in excess of the termination of employment. •
Slide 7: Does ERISA apply to all Retirement Plans?
Does ERISA apply to all Retirement Plans? • ERISA does not apply to all retirement plans. • Key Element – If there are “employees” or “individuals eligible” to participate in the plan: o Owner and Spouse = No o Partners and Spouse(s) = No o At least one (1) employee = Yes o Eligible Individuals = Ye
Slide 8: Some Consequences of ERISA Application
Some Consequences of ERISA Application Disclosure requirements to participants (SPD, Establishment of trust reports and notifications) and reports to the US- DOL (Form 5500) Acquisition of vesting rights Prohibited transaction Anti-cutback rule Bond Rule in case of future reductions of benefits Lega
Slide 9: Asset Protection Considerations for Retirement Plans
Asset Protection Considerations for Retirement Plans • If a plan is subject in full to Title I of ERISA (i.e., it is “funded” and covers “employees”), then assets are generally protected from claims from creditors of the employer and the employee. See ERISA Section 206(d)(1). • If a plan is not subj
Slide 10: Typical Parties to a Retirement Plan
Typical Parties to a Retirement Plan PLAN Other Employers SPONSOR PARTICIPANTS Trustee Retirement ERISA § 3(21): A person is a fiduciary Plan/Retirement Trust with respect to the plan to the extent the person exercises any discretionary Custodian authority or control over the management of the plan
Slide 11: Ownership Rights Over PR Retirement Plan Assets
Ownership Rights Over PR Retirement Plan Assets • Under the New PR Civil Code, retirement plan assets are private property; but if community property assets (such as wages) are used to fund them, then there is a credit right. See Art. 515 of 2020 PR Civil Code. • In any case, periodic payments from
Slide 12: Ownership Rights Over PR Retirement Plan Assets (cont.)
Ownership Rights Over PR Retirement Plan Assets (cont.) • In case of the participant’s death, if (i) the plan is subject to ERISA, then (ii) the surviving spousal rights must be preserved (subject to spousal consent). • In any case, Act 9-2017 excludes such benefits from the decedent’s estate. • Act
Slide 13: Recent Legislation and Regulatory Updates
Recent Legislation and Regulatory Updates • Secure Act 2.0. • US Treasury Proposed Regulation on Long-Term Part-Time Employees under SECURE Act 2.0. • PR Treasury Circular Letter 24-01. • US DOL Retirement Security Rule: Definition of an Investment Advice Fiduciary. 13
Slide 14: SECURE Act 2.0
SECURE Act 2.0 • Signed into Law on December 29, 2022 (Pub. L. No. 117-328). • Intends to increase American retirement readiness. • Includes multiple provisions that affect a broad array of qualified retirement plans, and other retirement vehicles. • Incorporates multiple amendments to the US Code a
Slide 15: Impact of SECURE Act 2.0 on PR-Only Plans
Impact of SECURE Act 2.0 on PR-Only Plans • Mandatory ERISA amendments will impact PR-only and dual-qualified plans. • Mandatory US Code amendments will impact dual-qualified plans in PR. o May impact PR-only plans that have adopted US Code requirements as a matter of plan design. 15
Slide 16: Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans
Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans 1. Long-Term Part-time Employees – establishes a 2-year eligibility requirement for part-time employees in retirement plans subject to ERISA. o The age and service requirements for eligibility to make elective deferrals into a plan i
Slide 17: Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans
Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans • Improving Coverage for Part-Time Employees – SECURE Act 2.0 amended ERISA to require plan sponsors to allow employees who complete at least 500 hours of service in each 2 consecutive 12-month period to make elective deferrals into
Slide 18: Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans
Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans • Improving Coverage for Part-Time Employees – on November 24, 2023, the Internal Revenue Service (IRS) proposed regulations providing guidance on the required LTPTE’ coverage under the SECURE Act 1.0 and the SECURE Act 2.0. Among ot
Slide 19: Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans
Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans • Improving Coverage for Part-Time Employees – what should plan sponsors do? o Look for terms such as: “employee”, “eligible employee”, “exclusions”, “entry date”, “participation”. o Identify the plan’s eligibility requirements: part
Slide 20: Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans
Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans 2. Recovery of Retirement Plan Overpayments: o Plan fiduciaries have the discretion not to seek recovery of inadvertent overpayments without breaching fiduciary duties. o Certain conditions apply to enjoy the relief. o Effective as o
Slide 21: Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans
Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans 4. Elimination of Unnecessary Plan Reporting – ends the requirement to provide certain ERISA disclosures, notices, or documents to “unenrolled participants.” o Unenrolled participants must be provided with: 1) an annual enrollment re
Slide 22: Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans
Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans 5. New Requirement to Provide Paper Statements: o Defined contribution plans – 1 paper statement per year. o Defined benefit plans – 1 paper statement every 3 years. o No paper statement is required for participants who elect to rece
Slide 23: Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans
Main Changes in SECURE Act 2.0 that will affect PR Qualified Plans 6. The Retirement Savings Lost and Found Database: o Plan administrators must report certain plan information to the Secretary of the US DOL. − Name of the plan and name and address of the plan administrator. − Changes in plan status
Slide 24: PR Treasury Retirement Plan Limits for 2024
PR Treasury Retirement Plan Limits for 2024 (As Per PR Treasury Circular Letter 24-01) PR US 100% avg. comp. in Annual Benefit Limitation for Defined Plans $275,000 3 consecutive years or $275,000 Annual Contribution Limitation for Defined Contribution Plans $69,000 Same Annual Compensation Limit $3
Slide 25: Retirement Security Rule: Definition of an Investment Advice Fiduciary
Retirement Security Rule: Definition of an Investment Advice Fiduciary • April 23, 2024 – Final amendment by the US DOL to the Prohibited Transaction Exemption PTE 2020-02 and certain other prohibited transaction exemptions (PTE). • Redefines “advice fiduciary”. • Might require plan fiduciaries to m
Slide 26: Thank You!
=e “S NS Ra THANK YOU! "" Vv ee, Q:4
Slide 27: Gisela E. Sánchez Alemán, Esq.
Gisela E. Sánchez Alemán, Esq. Ferraiuoli LLC American International Plaza 250 Muñoz Rivera Avenue, 6th Floor San Juan, Puerto Rico 00918 gsanchez@ferraiuoli.com 27