I’m new here; I discovered MP and FIRE a few weeks ago (but have been very interested ever since).
I’d like your opinion on the following scenario:
I made a partial withdrawal from my 3a pillar for renovations less than 5 years ago.
This year, my heat pump broke down and I had to replace it. I’d like to make another withdrawal from a different Pillar 3a account to cover this.
From what I understand, this isn’t normally allowed (there’s a 5-year waiting period between withdrawals), but one of my colleagues was able to do it this year.
I’m wondering: if the bank allows the withdrawal, am I at risk of any consequences later on (for example, the tax authorities finding out)?
Do you have any experiences or advice to share on this topic?
Pension planning (second or third pillar) must be viewed holistically in Switzerland. There is no point in separating the foundations for tax purposes; the tax authorities take a comprehensive view.
A withdrawal from the 3A within five years should not qualify for the reduced tax rate. The tax authorities will generally give the taxpayer two options: 1) transfer the amount back into the 3A account, or 2) tax the amount received as ordinary income.
I can’t find it in the BVV/OPP 3 ordinance, the WEFV/OEPL/OPPA ordinance (for the support of own housing acquisition) or the other law texts linked in them (BVG/LPP law, code of obligations).
I may have missed something, where does the rule applying the limitations per retirement foundation comes from?
Unfortunately, it isn’t explicitly stated, but rather in the operation of how the law is written. From memory, it is written every 5 years and the context is within a foundation.
I know that’s not a very satisfying answer. When I was researching this, I also wanted something more concrete/explicit. But if it helps to convince you, finpension say the same thing.
The only thing I’m not sure about is whether this also applies to pillar 3a, but if OP says his colleague managed it, then I guess it does.
Les versements anticipés ne sont possible que tous les cinq ans (plus souvent s’il y a plusieurs fondations ou comptes. Informez-vous à ce sujet auprès de votre fondation de prévoyance).
I’ll defer to Finpension and PostFinance but it isn’t clear to me that the context in the WEFV/OEPL/OPPA ordinance is per foundation (there is no mention of it at all anywhere in the ordinance). The ordinance seems mainly written for the 2nd pillar though it applies to both the 2nd and 3a pillars. I find that, in general, the 3a pillar is poorly integrated in the legislation.
They did it this year so I presume the taxation hasn’t been done yet. We’ll know what the tax office thinks of it when they’ll receive their decision.
The tax office shouldn’t have anything to say on the matter. Unlike pillar 2, for 3a, there’s no 3 year blocking limit on withdrawals. You can even pay in and withdraw in the same year.
The main tax concern is that you don’t pay more than the limit and deduct more than the annual allowed amount, and that’s a question when paying in, not when taking out.
The question of ability to withdraw is one for the foundation, not the tax office.
Interesting, thanks for all this information. As for this specific text, I am unsure about how to interpret it. I understand ‘plusieurs fondations’ to be different legal entities, while ‘plusieurs comptes’ would refer to different account within the same foundation.
According to the finpension article linked by @PhilMongoose the money has to come from different foundations.
There’s clearly no exact legal boundaries (I think we’d have found it?), so it’s up to a given foundation to decide how the article applies (per contract, per foundation, global).
I think different accounts are technically separate contracts, so it’s defensible.
(And there’s no downsides to them as long as it’s defensible)
edit: I can potentially see the reasoning (didn’t check in German), Art. 30c LPP is the legal basis (Fedlex) and it uses singular when defining:
L’assuré peut, au plus tard trois ans avant la naissance du droit aux prestations de vieillesse, faire valoir auprès de son institution de prévoyance le droit au versement d’un montant pour la propriété d’un logement pour ses propres besoins.
Even if you accept the combination of all 3a accounts, I don’t see that it would automatically apply to combine pillar 2 and 3a together, given that the rules come from 2 different laws.
The law is weird. The limitation to 1 withdrawal every 5 years for own home ownership is in the BVG/OPP 3 ordinance. It is referenced as coming from the WEFV/OEPL/OPPA ordinance, which is worded as if only the 2nd pillar was taken into account.
I guess it’s one of these situations where:
the pension foundation has a lot of leeway to allow the withdrawal in the first place ;
the cantonal tax office has a lot of leeway as to how it gets taxed (deductions for the contributions and taxation at withdrawal)
→ it will differ from canton to canton until someone takes it to the federal court (it may have been done, I haven’t searched the database though @nabalzbhf may have).
I’m not that great at legal German but the court opinion:
Entsprechend sind auch die den jeweiligen
Säulen zuzuordnenden angesparten Gelder als Einheit zu betrachten, unabhängig davon, ob die Beiträge bzw. Gelder bei verschiedenen Ausgleichskassen (erste Säule), bei verschiedenen beruflichen Vorsorgeeinrichtungen (zweite Säule) oder bei verschiedenen anerkannten Vorsorgeformen im Sinne von Art. 82 BVG (Säule 3a) einbezahlt
wurden.
That said Aargau tax office explicitly allows it in the same doc referencing the court case. (The court case was 3rd pillar only).
I guess OP could simply ask their Canton what the practice is. (And it seems like worst case you’d pay the extra progression to make it tax neutral which seems fair).
Wow, you’re amazing—I didn’t expect so many responses so quickly. Thank you very much.
I notice that there’s some confusion between the interpretation of the law and what certain institutions (Finpension, Postfinance) say on their websites.
I know my colleague had to transfer his savings to another institution in order to withdraw them. In fact, it was the banker who told him to transfer his 3a account so he could access the funds.
So, withdrawing within less than 5 years is possible if it’s not with the same institution (I have no idea about different accounts within the same institution).
The question that remains: how will the tax authorities handle this situation? Each canton may handle it differently, but it seems to me there’s a federal tax involved.
So my plan is to be transparent with my bank by explaining the situation and seeing if they’ll authorize the withdrawal. If they approve it, then I’ll take the risk that the tax authorities might not be happy, but I can defend myself by pointing to the bank’s decision.
I’ll keep you posted on how things turn out for me, and by the end of the year, I’ll let you know about my colleague’s situation as well.
Whether you are allowed to withdraw from the pension fund; and
What is the tax impact
So I think the answer to 1 is, yes you are allowed if different pension institutions.
But the court case determines how this is taxed. The opposition is not to the withdrawal but to artificial splitting across tax years to get a better tax progression.
In that case, for the purposes of taxing the withdrawal, they aggregated it to calculate the tax. I was just thinking of the first question that I was blinded to the 2nd.
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