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Old 06.10.2010, 16:36
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Yearly limit 3a account

Hi,

I am moving to the UK soon and I was thinking to leave part of the money I saved in a bank here and in CHF. Since I haven't found a fund with a decent perfomance, I was thinking about transferring the money into the 3rd pillar account (3a), which gives a better interest rate than most of the saving accounts. After a conversation with a consultant at UBS though, it looks like it is not possible to transfer in exceed of the yearly limit of 6566chf, which I understood before was only the threshold over which it is not possible to deduct the amount from the taxes.

Does anybody have a clue if it's correct what the guy said? I mean does anybody know if you can deposit more than the 6566chf/year in your 3a account?

Thank you
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  #2  
Old 06.10.2010, 16:42
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Re: Yearly limit 3a account

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Hi,

I am moving to the UK soon and I was thinking to leave part of the money I saved in a bank here and in CHF. Since I haven't found a fund with a decent perfomance, I was thinking about transferring the money into the 3rd pillar account (3a), which gives a better interest rate than most of the saving accounts. After a conversation with a consultant at UBS though, it looks like it is not possible to transfer in exceed of the yearly limit of 6566chf, which I understood before was only the threshold over which it is not possible to deduct the amount from the taxes.

Does anybody have a clue if it's correct what the guy said? I mean does anybody know if you can deposit more than the 6566chf/year in your 3a account?

Thank you
unless you're self-employed you can't deposit more.
Did you have a look at Postfinance E-deposito: you get 1.25%
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Old 07.10.2010, 10:30
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Re: Yearly limit 3a account

the limit for a single 3a account and for the yearly tax benefit is 6566 CHF for 2010.

You can open as many 3a accounts as you like though, with as many different institutions and deposit as money in each of the accoutns. for a given year the institutions will only allow 6566CHF into the account and you will only receive one 6566CHF tax break per year.

bill
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  #4  
Old 07.10.2010, 11:18
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Re: Yearly limit 3a account

The special 3a accounts are locked until you retire, the interest is paid free of taxes. As these "high" interest savings accounts are meant for people living here and saving for their retirement I am not sure if you qualify when you leave Switzerland.

As Mr Vertigo mentioned, the Post Finance give an excellent rate, and are very safe! You can also deposit easily and withdraw (8 times per year free of a CHF 10,-- penalty?).
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Old 15.10.2010, 14:00
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Re: Yearly limit 3a account

I was told the fund could be used for saving for a house as well as retirement. Also, if you mnoved away from Switzerland you could withdraw the funds.

Does anyone know whether or how you get taxed on it if you left the country?
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Old 15.10.2010, 14:18
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Re: Yearly limit 3a account

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I was told the fund could be used for saving for a house as well as retirement. Also, if you mnoved away from Switzerland you could withdraw the funds.

Does anyone know whether or how you get taxed on it if you left the country?
Yes, you get taxed on it. You also get taxed on it when you withdraw the amount on retirement (or to fund a house). It is more of a tax deferal than avoidance system. The theory being that your income will be much lower when you retire, so your income tax bracket will be lower too.

You also get taxed on it at different rates. There is an optimum, around 25k CHF that you should make sure you don't go over, as you cannot withdraw a partial amount, only the full balance of an account.

Fictive example:
75k CHF in one account - withdraw in one go (because you have to) = more tax

Alternative: 25k CHF x 3 accounts, withdraw 25 k CHF one year, another 25 the next and so on = lower tax bracket

As stated above, you can have as many 3a. accounts as you want.

Hope that makes sense - head feeling a little fuzzy.
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Old 15.10.2010, 14:29
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Re: Yearly limit 3a account

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Yes, you get taxed on it. You also get taxed on it when you withdraw the amount on retirement (or to fund a house). It is more of a tax deferal than avoidance system. The theory being that your income will be much lower when you retire, so your income tax bracket will be lower too.

You also get taxed on it at different rates. There is an optimum, around 25k CHF that you should make sure you don't go over, as you cannot withdraw a partial amount, only the full balance of an account.

Fictive example:
75k CHF in one account - withdraw in one go (because you have to) = more tax

Alternative: 25k CHF x 3 accounts, withdraw 25 k CHF one year, another 25 the next and so on = lower tax bracket

As stated above, you can have as many 3a. accounts as you want.

Hope that makes sense - head feeling a little fuzzy.
If it's tax deferral and you can pay a lower amount in retirement (if you have a lower income), does this mean if you had no other income in Switzerland during that tax year, it wouldn't be taxed? e.g. what would happen if I moved away on January 1st?
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Old 15.10.2010, 14:36
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Re: Yearly limit 3a account

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If it's tax deferral and you can pay a lower amount in retirement (if you have a lower income), does this mean if you had no other income in Switzerland during that tax year, it wouldn't be taxed? e.g. what would happen if I moved away on January 1st?
I think that is right. But that's only based on my understanding of the situation. I have no confirmatory data to back it up.
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Old 15.10.2010, 14:55
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Re: Yearly limit 3a account

The taxation on withdrawal from 2/3 pillars is unrelated to your actual earned income. The amount withdrawn is treated as a notional independent income. I believe the calculation basis (at least in ZH) is something along these lines (if you really care there is a calculator at http://www.steueramt.zh.ch/cgi-stcal...ifNP_Kap99.cgi)

X = value withdrawn (e.g. 100,000)
T% (tax rate) = based on X/10 notional income e.g. 10,000 income = 2% (rate is total guess)

Finally, tax the whole X at T% = 2,000 tax
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  #10  
Old 15.10.2010, 15:02
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Re: Yearly limit 3a account

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The taxation on withdrawal from 2/3 pillars is unrelated to your actual earned income. The amount withdrawn is treated as a notional independent income. I believe the calculation basis (at least in ZH) is something along these lines (if you really care there is a calculator at http://www.steueramt.zh.ch/cgi-stcal...ifNP_Kap99.cgi)

X = value withdrawn (e.g. 100,000)
T% (tax rate) = based on X/10 notional income e.g. 10,000 income = 2% (rate is total guess)

Finally, tax the whole X at T% = 2,000 tax
That's a very good way of saving if you are planning on moving away at some point then.
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Old 16.10.2010, 12:02
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Re: Yearly limit 3a account

Did your UBS consultant tell you about the 3B accounts? If you have a 3A account with them you can put twice the annual 3A limit into a 3B account and get the same interest rate as for 3A. It's to encourage long-term saving, but doesn't have the 3A tax benefits.
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Old 23.03.2011, 20:44
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Re: Yearly limit 3a account

Also be aware that the annual limit for tax deductable contributions to a Pillar 3a account has been raised to CHF6682/year (assuming you have an employer-provided pension fund as well), so even a bit more savings potential there!
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