Does it depend in on how much you earned as student and maybe contributions to pillar 1/2?
First year I earned nothing, second year I was teaching assistant for 3 months. But my pillar 1/AHV contribution was below the annual minimum.
The third year was 25th year of my life. I had 4 months internship in 25th year and started PhD in 26th. Even though I worked partially in those years I still contributed more than the min for pillar 1 and pillar 2 also.
So probably the first 2 years won’t count.
@nabalzbhf Is it the year you turn 24 or from next year onwards?
I am not aware of any official document that says you did not contribute to pillar 3a. Not even your tax returns, probably. I mean, what happens if you did contribute but forgot to include it on your tax return?
Supposing neither the firm where you have your 3A nor the tax office notices, you have money “stuck” in a 3A without the tax deduction. It will accrue tax free interests/dividends but the whole sum will be taxed (at a reduced rate) when you take it out, hopefully balancing out the taxes you haven’t paid in the mean time.
As a quick estimate, CHF 6’000 growing at a 7% rate for 40 years brings in a little less than CHF 84’000 in interests. Taxed at 6%, it makes roughly CHF 5’400 of taxes.
With 3% dividends taxed at a real rate of 20% along the way, you’d have paid roughly CHF 6’600 along the way. That’s with an fringe situation where you invest it for 40 full years and are already taxed at the high real rate of 20% in your mid twenties.
My take is that there’s not enough money to get there for the tax offices to bother and the fact that your money is stuck until retirement, self-homeownership or self-employement counteracts the few benefits you’d get from it. The new system would probably change that since contributing CHF 33’000 every 5 years may put you in a lower tax bracket and/or make you qualify for subsidies. My understanding is that pillar 3A providers would have to announce the amounts you put in, though, so all would be registered and you wouldn’t be able to forget to declare some of it anymore.
The fringe case where you’d have forgotten to declare some 3A contributions before the new law gets enforced and would qualify for increased contributions because of it is probably too isolated for the law makers and tax offices to be worried about it. It’s important to note that the law is still in the making and may be subject to a referendum, so it may never see the day. Gaming it now could not bear the results one would hope for (in case anybody was thinking about it).
The tax offices wouldn’t really care, their budget isn’t likely to get cut. It’s the other offices that would loose financing: social, environment (including natural hazards monitoring), diplomacy, transportation, economy, agriculture, defense, …
I disagree with opponents on this point. For example, as an average-earning parent with a lot of kids, there is no major tax benefit to using the pillar 3a as long as I can claim the child tax exemptions. However, as the kids grow and the child tax exemptions go, the pillar 3a deductions will become much more beneficial.
Thus, maxing out pillar 3a contributions to make up for the years spent raising the kids would be very beneficial to (poor-ish) families in my opinion.
Thanks for sharing!
Interesting… So they set the “max amount within 3a account by date”, which could technically mean that one could pay in more for the past years in case their funds went down with the stock market?
But I guess the tax advantage would still be applied just on the “max per year” amount, so it wouldn’t make too much sense.
They must consider your payments, not the current value of your 3a savings.
I can only imagine two reliable source for that: 1) your tax declarations or 2) the institution where you keep your 3a actually keeps a history of your payments.
Being able to pay in X, where X = max_amount - current_amount; and not strictly having to follow what’s been the limit in the past years → possibly
Getting the tax advantage/deduction for the whole X, or just for the part amounting up to the limits in the missed years → not sure
But it could go both ways - be it an advantage or disadvantage - as funds could have definitely grown more than their 1%/year zins rate.
I guess if they wanted, they could easily request you to provide yearly reports from your 3a pillar providers, to confirm your in-payments.
The effort burden is on you, not them.
Thanks for sharing! Do I get it correctly: the maximum amount you can pay afterwards to 3a is:
check your birth year, then go to the most-right column (amount 31.12.2020), deduct the payments you already made in the past from the maximum amount
e.g. for someone born in 1985, maximum amount on 31.12.2020 is 78’780.-
if the person only paid the max. annual amount once last year (6’826.-), he can fill his 3a completely by paying the difference of 71’954.- (78’780 - 6’826)
Am I getting this correct? It would be really great to have this opportunity, especially if you are an expat and didn’t have the change to pay AHV in your first professional years.
Bundesrat has to discuss it now. First they have to make a proposal of the new system, then they have to think about how to implement it, what to adjust etc.
We are talking about Switzerland here. Would be surprised if we see it before 2025.
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