USA Income tax situation of transferring 401(k) funds from Puerto Rico to an IRA in the US

Apr 24, 2017
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United States
I have a client that wants to transfer funds from a 401(k) that is held by a company in Puerto Rico, The funds will be transferred to an IRA in the US. I have been told that funds in PR cannot be transferred from a 401(k) in PR to qualified account in US (it would be in an IRA, known as a SPIA which would distribute an annual income, for a period of 10 years which is subject to US taxes when distributed and received..

I am a financial advisor and this is the first time I have heard of this. The company holding the 401(k) has told me this.

At another level can the individual owning the account take a distribution personally, forward the funds to the US company creating the IRA, and still be covered by the 60 day rule which will exempt him from paying taxes on the entire amount that has been distributed?


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