Best strategy for dealing with one huge 3a account because of indirect amortisation with 3a?

Banks, Insurances & Third Pillar
1

Hello there,

I’ve searched the forum here and haven’t found any similar question:

How do I deal with overfilling a 3a with UBS that is for indirect amortisation (IA)?

The main issue is that the amortization 3a accounts will become much bigger than the others. This way we won’t be able to do the best tax optimisation when reaching retirement.

Situation:

  • We have a CHF 710k 10-year mortgage running until 2030 at 0.9%.
  • The property was valued at around 800k when we bought it. We think it could be sold for at least CHF 900k now.
  • I have 4 3a accounts, one of which is with UBS (Passive 100) and which has to receive 6000 CHF per year for IA. Currently there are around 20k in.
  • The other 3a accounts are with VIAC and Finpension, which I am filling up with the rest (currently CHF 1056 per year). They have between 15k an 20 each (100 % shares in various configurations).
  • My wife has two 3rd pillars with UBS, one for IA, the other not. The one for indirect amortisation is also around 20k.

So, my intended strategy so far is to

  • call our advisor and open 1 new UBS 3a each and fill those from now on.
  • Then, I hope that, by the time we get to renegotiate in around 6 years, we can get out of IA due to a value increase in the property. Then we could move our UBS 3a to any other 3a.

Do you have any better idea?

2

This is fine, do it.

1 Like
3

If it’s cool with your canton to have >4 then the plan sounds good for you. I had the same situation with 1 account getting way higher than the others but my canton is sensitive to more than 2-3 3a accounts, so I can’t go too far in qty.

I’ll probably buy into my p.f. 3-5y before retirement and take it back as capital at retirement. Hoping to still be around to enjoy it :sweat_smile:

4

If I remember correctly, no canton restricts the number of 3a accounts you can have. It’s about the number of tax years you spread your withdrawals when retiring. Whether you have 5 3a accounts and withdraw one each year between 60 and 65 or whether you have 10 3a accounts and withdraw two each year between 60 and 65 doesn’t affect the amount of taxes you pay (assuming even distribution across accounts) and thus, the tax authorities shouldn’t care.

That said, while it’s not possible to split 3a accounts, it is possible to merge 3a accounts, so it shouldn’t be a significant concern either way.

5

This is indeed a better precision. I was indeed projecting to retirement. And you also give several good examples where we can merge, use for buy back of p.f., or even start our buisness etc in the meantime…all valid. And can go for several if it makes sense in someone’s unique case.

However in Neuchatel, I’ve had several discussions with tax office to test their consistancy across their people and they all have said « while not illegal on a federal level (no formal restriction exists), they will treat anything above 3 as suspicious and anything more than 4 as « likely » tax evasion (not optimisation) » …I know it’s sounds weird but honestly 4 at retirement will be enough for me so not a big deal either.

After checking over several months with several replies aligned to this, no sense provoking either.

6

Ok but then a question why is it even allowed to have >4 accounts if authorities treat is as tax evasion?

7

And if you voluntarily work for another five years until 70 you have ten years for withdrawal meaning up to ten portfolios would make sense from a tax point of view. I guess the tax office employee doesn’t even know the law correctly which is kind of sad.

8

Thanks for all your input.

After writing the question, I’ve had the exact same idea.

See above, Jay’s answer. You can have 25 3a accounts, but you have to consider the maximum number of years over which you can withdraw them without some cantons counting it as tax evasion. If you have 25 accounts, you can close 5 each (or 7-8 if only 3 years are allowed). They all count towards the year.

I’ve written him, we’ll see how it goes.

9

I’m assuming UBS requires you to use their pillar 3a products for indirect amortization. But they should let you spread the indirect amortization across several pillar 3a accounts.

You could then consider withdrawing some of these accounts early to amortize your first mortgage, to avoid possible tax issues at retirement.

10

My understanding is that it’s the whole point of the tax office response, they think it’s being structured for no reason except avoiding taxes. The 5 years is considered the limit of how much you can spread it out without being a pure tax avoidance in many cantons (but practice can differ between cantons).

1 Like
11

This is what I thought but after calling 4-5 times and getting the same answer each time, I had to conclude that it’s a clear instruction for them.

I didn’t ask outside of the std scenario I was considering (5 accounts for the std period 60-65), but they were clearly avoiding to say « yes that’s fine » and were intentionally implying that I would have issues >4.

Perhaps in the end it’s an intentional filter to dissuade but overall a bluff? I can’t know.

12

My approach is to assume that I will be able to spread over a number of years and hope that the tax law doesn’t change by the time I need to do this.

I’m happy to take on the tax authority if they want to challenge me.

13

Well then their reasoning wouldn’t make sense because you are “avoiding” taxes already when having more than one account. Moneywise the more accounts you have the more taxes you save but you save taxes no matter if you have 2, 3 or 8 accounts.

I found an article, which was last updated on the 05.12.2023, in german while researching (I guess you can use the built-in browser website translator) which states the following:

Canton of Jura:
Maximum of two 3a accounts with the same bank/provider

Canton of Zurich and Geneva:
Maximum of three accounts no matter how many banks/provider

There are unfortunately no sources in the article. So I can’t confirm or deny the text.

14

No you are allowed to have 5 accounts. Actually you can have as many as you want during your lifetime as long as you combine them before withdrawing and limit the withdrawals to 5 spread over 5 years. I am in a similar situation with my mortgage and as soon as my Property is valued again I’ll send the pledged funds to Viac.