Employer's FAQs

Employer´s FAQs

Retirement Plans 401(k)/1165(e)

Employer Information

Today it´s more important than ever for employees to save for retirement and for employers to provide the means for their employees to save. The Trust Division of Banco Popular provides the most convenient and cost-effective approach for meeting these needs.

Employees will have a wide range of mutual funds in which they can invest, as well as convenient access to their accounts through our Internet Online Service, and through our telephone service, which can be accessed by dialing (787) 724-3657 or 1-888-724-3657, 24 hours a day. This will enable participants to monitor and manage their retirement assets on a daily basis.


Why should you consider a retirement plan for your employees?

A retirement plan is a great way to compensate your employees and offer them financial security for the future. In addition it:

  • Helps increase employee loyalty
  • Provides an incentive for saving
  • Provides for tax-deferred contributions until retirement

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Why do you need a Trustee?

All qualified retirement plans in Puerto Rico are regulated by Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"), which imposes fiduciary responsibilities on the plan administrators, trustees and employers.

The complexity and breadth of ERISA, subject to continual interpretation by the Federal Department of Labor, as well as local tax considerations, make it increasingly difficult to conscientiously meet the fiduciary responsibilities that are a part of managing and administering a retirement plan. That's why many plan sponsors hire the services of an institutional trustee, such as the Trust Division of Banco Popular, to help them develop, implement and manage a retirement program for their employees.

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Why is Banco Popular the best alternative?

The Trust Division of Banco Popular de Puerto Rico has nearly half a century of experience providing trust services for defined-contribution and defined-benefit plans. A complete range of services related to the design, establishment, investments and administration of retirement plans is offered under one institution, for both qualified and non-qualified plans with the Puerto Rico Treasury Department. You save time and money while dedicating yourself to your business because at Banco Popular we work for you.

Our services include:

  • Plan Design.
  • Record-Keeping for Participants' Accounts.
  • Detailed Reports.
  • Educational Program for Participants.
  • Customer Support.

Many of our clients decide to adopt our convenient product the Popular Master Plan, also known as Banco Popular de Puerto Rico Master Defined-Contribution Retirement Plan. Through the Popular Master Plan, you consolidate in one institution the trustee, record-keeping and investment services of the plan.

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Popular Master Plan

The Popular Master Plan will help you simplify and reduce the costs of implementing and operating a plan. It makes this possible by providing a plan already in operation and qualified by the Puerto Rico Treasury Department. By using the bank as a trustee and record-keeper of the plan participants' accounts, all the services are consolidated under one institution, thereby increasing the efficiency of the plan's administration.

With the Popular Master Plan, we simplify the design and reduce the implementation and operational costs of your defined-contribution retirement plan by:

  • Handling the qualification of the Plan with the Puerto Rico Treasury Department.
  • Assisting you in the design and establishment of an appropriate investment policy to help you meet your fiduciary responsibility.
  • Processing plan distribution payments to participants.
  • Preparing the trust and/or participant's tax reports for the Puerto Rico Treasury Department and Form 5500.
  • Offering educational programs to participants, and much more.

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Defined-Contribution Plans:

Profit-Sharing Plan
Employer Characteristics
Benefits
Cyclical or growing businesses; companies with variable cash flow and employers who prefer to maintain flexibility in the incentives and benefits granted to employees.
Employer can contribute annually up to 15% of net profits or 15% of the compensation paid to all participants, whichever is less.
Profit- Sharing Plan with a Cash or Deferred Arrangement (1165(e) Plan
or 401(k) Plan)
Employer Characteristics
Benefits

Cyclical or growing businesses; companies with variable cash flow and employers who prefer to maintain flexibility in the incentives and benefits granted to employees.

Profit-Sharing Plan that also promotes saving by employees. The employee participation is voluntary. Employees may contribute from 1% up to 10% of his employer's compensation or $8,000, whichever is less. Employee's contributions are taxed deferred until time of distribution.

In addition, employees may save up to 10% of compensation since being a participant in the plan on an after-tax basis.

At the employer's discretion, the employer contribution can be a:

  • Profit Sharing Contribution: a variable amount based on a percentage of net profit or participants’ compensation.
  • Employer Matching Contribution: a relatively fixed amount tied to a percentage of the employee´s
  • A combination of the two previous options.
Money Purchase Plan
Employer Characteristics
Benefits
Businesses with stable revenues, with good cash flow and businesses that need to reduce their tax liability through significant deductions.
Requires an employer contribution based on a fixed percentage, not to exceed 25% of participant's annual compensation.

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Post-Sale Support Service

Our service does not end with the sale. Once a plan is established, you are assigned an account officer to assist you in the administration of your plan. Also, both our Retirement Plan Specialists and our Investment Group will provide support in various areas, such as record-keeping, plan administration and evaluation of the results and characteristics of the investments available under the plan.
We offer support in various areas after the adoption of the plan: Plan Conversion, Plan Review, Training, and Educational Program to Participants.

Plan Conversion: Whether you have an existing individual plan or one under the Popular Master Plan, our team of Retirement Plan Specialists will help you review, evaluate and identify the legal and/or operational elements that need to be added, eliminated or amended in your plan.

Plan Review: Once the Plan is established under the Popular Master Plan, our Retirement Plan Specialists review all related documents to ensure that the plan remains in compliance with the applicable legal requirements and that administrative procedures are kept up-to-date to facilitate the administration of the plan.

Training: Our Retirement Plan Specialists train the personnel in charge of administering the plan, explaining their responsibilities and procedures in the implementation and administration of the plan.

Educational Program to Participants: At your request, we can also provide educational and enrollment presentations to employees about the plan's general terms, possible changes, and investments.

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THE INVESTMENT PRODUCTS OFFERED THROUGH BANCO POPULAR´S RETIREMENT PLANS ARE NOT FDIC INSURED. THESE PRODUCTS ARE NOT BANK DEPOSITS, OBLIGATIONS OF, NOR GUARANTEED BY BANCO POPULAR DE PUERTO RICO. THEY ARE SUBJECT TO MARKET RISKS, INCLUDING THE LOSS OF PRINCIPAL. PLEASE REQUEST A PROSPECTUS AND READ IT CAREFULLY BEFORE INVESTING.