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Old 04.12.2018, 13:10
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3rd pillar - Question for Mid-year comers

Hi all,
This is my first post
I moved to Switzerland and started my new job on October 2018.
I am taxed at source.
Right now I am reading about the 2nd and 3rd pillars and their best advantage is the tax reduction (the amount you put there, isn't taxed). I know that in 2018 you can put at max 6768CHF for 3a pillar.
Lets say that I pay 20% salary taxes
If I put the max (6768 chf) on my 3rd pillar; what will happen?
a) Will get 20% * 6768 = +-1357 chf back;
b) Will get the minimum between 1357 chf and all my 2018 taxes;
c) Will receive only a portion of the 1357 chf that corresponds to the time I've been working (3 out of 12 months on my case); In that cause I should only increment the 3rd pillar of 6768 * (3/12) CHF.
d) Something completely different, and help me.

At this time I haven't still transferred any amount to the 3rd Pillar because I don't know if I will benefit anything from it.

Thanks in advance
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  #2  
Old 04.12.2018, 17:42
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Re: 3rd pillar - Question for Mid-year comers

Pillar 2 and 3a contributions are not pro rated for partial years.
How much you get back depends on your marginal tax rate.

Be aware that the payout is taxed and payout is very limited to a few scenarios permitted by law. Do not sign up for an insurance scheme pillar 3a until you understand all in and outs, including how much money you can get back if you leave the country in 3 years, wish to finance in 6 years, you die in 10 years, or are not able to pay the yearly premiums. Specially compared to a standard pillar 3a bank account.
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  #3  
Old 10.12.2018, 22:09
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Re: 3rd pillar - Question for Mid-year comers

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Pillar 2 and 3a contributions are not pro rated for partial years.
How much you get back depends on your marginal tax rate.

Be aware that the payout is taxed and payout is very limited to a few scenarios permitted by law. Do not sign up for an insurance scheme pillar 3a until you understand all in and outs, including how much money you can get back if you leave the country in 3 years, wish to finance in 6 years, you die in 10 years, or are not able to pay the yearly premiums. Specially compared to a standard pillar 3a bank account.
I'm sorry, I haven't fully understood you.
When you say "3a contributions are not pro rated for partial years" you mean that this year I can't deduct anything, or that is something like (but not exactly as) Option c).
I know that this plans are meant to be for retirement, I'm planning on staying in Switzerland for the long run. But even it it doesn't happen, if you leave permanently the country, you get to withdrawn the money (of course paying taxes of it).
I also didn't understood what do you mean by "yearly premiums"
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Old 11.12.2018, 10:20
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Re: 3rd pillar - Question for Mid-year comers

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I'm sorry, I haven't fully understood you.
When you say "3a contributions are not pro rated for partial years" you mean that this year I can't deduct anything, or that is something like (but not exactly as) Option c).
It means that the full amount is tax deductible even if you arrive in December.
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I know that this plans are meant to be for retirement, I'm planning on staying in Switzerland for the long run. But even it it doesn't happen, if you leave permanently the country, you get to withdrawn the money (of course paying taxes of it).
Correct.
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I also didn't understood what do you mean by "yearly premiums"
Both banks and insurances offer products for pillar 3a. With an insurance plan the annual payment (currently 6768) is called premium. In most cases an insurance plan is a very very bad choice, expect to lose at least 2 annual premiums if you want to get out of the contract after a few years.
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Old 11.12.2018, 23:10
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Re: 3rd pillar - Question for Mid-year comers

Hello everyone,


I hope that pedrouops will not mind that I use his thread but I have a very similar question.


I moved into Switzerland and started to work in November and I am taxed at source with an annual gross salary of approximately 90k.


I live in Zurich and will pay approximately 1100 CHF in taxes for these two months. If I max the pillar 3a, the annual tax savings should be approximately 1800 CHF (according to comparis.ch and my details).


My question is: If I max it now, do I get the full tax refund as the savings are higher than the tax paid? Or do I get back only approximately 2/12*1800 CHF = 300 CHF? If that is the case, then it is not probably worth it this year.



Thanks a lot!
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Old Yesterday, 00:08
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Re: 3rd pillar - Question for Mid-year comers

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It means that the full amount is tax deductible even if you arrive in December.

Correct.

Both banks and insurances offer products for pillar 3a. With an insurance plan the annual payment (currently 6768) is called premium. In most cases an insurance plan is a very very bad choice, expect to lose at least 2 annual premiums if you want to get out of the contract after a few years.
I wasn't clear about what kind of 3rd pillar I was referring to. I am planning to subscribe to a Bank 3rd pillar (PostFinance).
Suppose that I only arrived in December, and that the full amount is tax deductible:
If I received gross monthly salary of 8k; Payed 1k of taxes; and put 6768chf on 3rd pillar.
I would deduct the same amount as if I worked since January?

A tax payer with the exact same salary that payed 12*1k would receive the same deduction as I would only with 1x1k?
I understand that the calculations aren't as simple as I want to put them... But for now I only need to understand the basic and therefor the "approximate" math

Thanks in advance
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Old Yesterday, 00:29
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Re: 3rd pillar - Question for Mid-year comers

I remember reading a thread about this subject in this forum but I am not finding it right now. The conclusion is that 3rd pillar is only worth for a very specific scenario. The tax saving is just not worth the low return on investment and loss of flexibility. In the long term you would be better off by putting your money in a balanced investment portfolio.
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Old Yesterday, 01:01
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Re: 3rd pillar - Question for Mid-year comers

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I wasn't clear about what kind of 3rd pillar I was referring to. I am planning to subscribe to a Bank 3rd pillar (PostFinance).
Suppose that I only arrived in December, and that the full amount is tax deductible:
If I received gross monthly salary of 8k; Payed 1k of taxes; and put 6768chf on 3rd pillar.
I would deduct the same amount as if I worked since January?

A tax payer with the exact same salary that payed 12*1k would receive the same deduction as I would only with 1x1k?
I understand that the calculations aren't as simple as I want to put them... But for now I only need to understand the basic and therefor the "approximate" math

Thanks in advance
Your tax saying will be minimal unless you're a very high earner.
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Old Yesterday, 12:44
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Re: 3rd pillar - Question for Mid-year comers

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Your tax saying will be minimal unless you're a very high earner.
What do you consider a "very high earner"?
The taxes are declared as "Quellensteuerabzug" on the payslip, no?

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The tax saving is just not worth the low return on investment and loss of flexibility. In the long term you would be better off by putting your money in a balanced investment portfolio.
I was thinking that you could do both using for example VIAC for the 3rd pillar. Am I wrong?

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I hope that pedrouops will not mind that I use his thread but I have a very similar question.
I don't mind at all, that is my question
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