Multiple 3rd pillar accounts

Investing / Others
1

Currently I have 5 3rd pillar accounts in VIAC. So I could optimize my taxes while withdrawing each of them from 60 to 65 y. old.

Does it make sense to open another 5 in FinPension?
Is there any FIRE scenario where having more than 5 3rd pillar account is a good idea?

2

No, but there is a FIRL scenario :rofl:. Under certain conditions you can withdraw 3a for 10 years if you are working later. Conversely it is not a problem to withdraw multiple accounts per year. And also amounts withdrawn by spouses count together, so there will be some overlap if you are of close age.

Nevertheless I wouldn’t base my choice of investment vehicle on desired number of accounts. If you want to invest with finpension, go for it, if you don’t, don’t.

3 Likes
3

One possible reason to use multiple pillar 3a accounts is for greater flexibility with regards to early withdrawals (e.g. leaving the country, buying a home, etc.).

Another possible reason is for diversification (i.e. you want to use different investment vehicles offered by different pillar 3a service providers, or you want to divide your assets at many different retirement foundations to spread risk).

Otherwise, the only retirement-related benefit would be in the case that Dr.PI mentioned. You can begin cashing out pillar 3a accounts 5 years ahead of OASI retirement age, and if you continue working after retirement age, you can continue cashing them out up to 5 years after. So if you remain employed until you are 70, then having 10 pillar 3a accounts would let you cash out your assets in 10 different tax years.

4

This is correct but I think one should assess if that may be relevant (tax-wise) depending on the amount you have on each of your multiple 3A accounts

1 Like
5

When withdrawing 3a capital for your own home, it’s possible to withdraw just a part of a 3a account (unlike other 3a withdrawals where you have to close the whole account).

2 Likes
6

Yes, that is possible, but it is not necessarily desirable. For example, you may not want to sell all your investments for cash in order to withdraw just part of the money. Dividing your pillar 3a into smaller chunks gives you more flexibility.

7

can you withdraw part of your 3rd pillar any time after you have left CH, or just at the time you are leaving CH?f
I leave CH and after a few years if I short of money, could I withdraw part of my 3rd pillar?

8

Take your pension fund also into account. While it’s possible to leave your 2nd pillar assets in a vested benefits account till you are 70, you might need it before that.

9

we can withdraw the 2nd/3rd pillar sooner only to buy you residence house, open an account or while you are living abroad:

In my opinion the most tax and compounding interest withdrawing strategy is:

  • 5 years before retirement age withdraw your five 3rd pillar accounts.
  • you can withdraw the 2nd pillar for 5 years after ordinary retirement age. So once you are leaving your last job split your 2nd pillar in two vested accounts. Then you could withdraw them in different years after your retirement (maybe like 4th year and 5th year).
  • about the 1st pillar pension you can get sth like a 30% bonus if you start to enjoy it not at the ordinary retirement age, instead 5 years later.

If you are gonna live abroad, prob make sense to select institutions for your 2nd and 3rd pillar in a tax friend canton.

Prob where you are living (if you are living abroad) have some tax effect while you are withdrawing your pillars. So select a tax friendly country. I have to research this. Prob we will need to pay taxes in CH and in the residence country.

Hope we could live longer enough to enjoy the money :smiley:

1 Like
10

I believe the „withdraw from one account each year for ten years“ once it‘s been successfully done by someone from this forum (may have to wait for @Cortana to retire). That level of tax optimisation is so egregious that a tax authority (at least in CH, if resident here) may actually bother about it and tax you at a higher progressive rate, as if you’d withdrawn all at once. And they wouldn’t be the first one to have this train of thought (I remember reading about it earlier, may have even gone to court).

Why? Many countries have a double taxation agreement with Switzerland.

1 Like