On August 7, 2008, the Governor of Puerto Rico signed into law Act 186, which increases the pre-tax contribution limits for Section 1165(e) savings plans. Under prior law, pre-tax contributions were limited to the lesser of 10 percent of compensation or $8,000 per year. The new law removes immediately the 10 percent cap, so that the limit for 2008 plan years is $8,000 regardless of compensation. It also increased the annual limits for plan years beginning in 2009 and thereafter as follows:
|Plan Year||Contribution Limit|
|2009 and 2010||$ 9,000|
|2011 and 2012||$ 10,000|
|2013 and beyond||$ 12,000|
Beginning with 2007 plan years, employees who have attained or will attain age 50 by the end of the plan year and whose pre-tax contributions have reached the applicable limit for the year may also make a pre-tax catch-up contribution of up to $1,000.
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