Pillar 3a: More than 5 accounts

Hi :wave:

According to a lot of information on the Internet, at least five 3a accounts should be held so that the withdrawal can be staggered for tax purposes. FinanzFabio even talks about six accounts (and says that others can’t count). But what I’m wondering about the whole topic is this:

The recommendation to set up five accounts is based on current legislation. But I’m still young. Nobody knows what it will look like in 20 years’ time. Maybe it will be possible to withdraw your 3a earlier? Or longer after retirement? Who knows for sure. Instead of five, a different amount maybe make then more sense. Wouldn’t it make sense to create at least 10 accounts?

  • If something changes on the legal side, you could benefit from more accounts
  • If nothing changes, you could simply merge the 10 accounts back into five

What are your thoughts on this?

You can have as many accounts as you like. The recommendations are based on current laws. Just make sure you use low cost provider which doesn’t charge extra fees for account opening , closing and maintenance……

If we go by assumption that anything can happen in future, then the best would be to have as many accounts as possible. With current costs, it doesn’t actually make it more expensive to have more accounts. But it’s just too many accounts to keep track of.

Since you want to be ready for scenario that you might have full flexibility to withdraw. Think about how much money you might withdraw when you actually withdraw on annual basis. And then this should give you an idea of how much you should have max in one account. For example if you would like to withdraw 100K per year and expected final capital is 700K, then 7 accounts should be enough.

Basically your annual withdrawal amount becomes the governing factor and your assumptions on expected growth.

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You do not even need to merge them before withdrawing.
What matters for the tax office is the number of calendar (tax) years you spread your withdrawals across as it is the determining factor for the (capital) tax progression.

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If you keep working past 65 you can still deposit into 3a until 70. Does that mean there are 10 years to withdraw in that case?

To my understand yes! But you have to work 5y more. Not very fire compatible ahah.

Everything would then be paid within the same (one) calendar year.

Payout becomes due five years after reaching the AHV retirement age, i.e. at 70.

Edit: misunderstood that you‘d want to withdraw after 70. That said, see below.

I heard yes. 5 years before the regular retirement age and 5 after. Or does it make 11 years?

I‘d want to see the tax office that will allow you tax deductions in the same year that you receive a payout - for 10 years in a row. :clown_face:

I think it’s about withdrawal.
But it would be a bit strange to keep making payments and withdrawals at same time.

So I believe when you start withdrawing, you stop contributing too

Apparently not :smiley:
https://finpension.ch/en/3a-deposit-and-withdrawal-in-the-same-year-is-that-possible/

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Wonderland :slight_smile:

Eleven:
https://finpension.ch/en/how-many-3a-accounts-make-any-sense-at-all/

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Maybe, but it is totally legal. You still may contribute to 3a until the last minus one year, while withdrawing 2nd or 3rd pillar money.

On the other hand, contributing to the 2nd pillar after a withdrawal might only result in a reimbursement of taxes paid upon the withdrawal. In this situation, increasing you contribution which is deducted from the salary, if it is possible, might make sense.

And on what legal ground could they prevent that?

You are either insured by a pension fund and can contribute CHF 7056 per year or you aren‘t and can contribute 20% of your net salary (if you are still working) up to a max. of CHF 35‘280.

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This is completely wrong.

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Yep, my wife works 60%, and she can contribute the full amount.

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I’ve deleted the previous to avoid misinformation

I remember when my wife was 3 months at the unemployment she was only able to contribute partially and not the full amount

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You must be confusing this with something else. Being unemployed for several months has no impact on your right to contribute to the pillar 3a. In fact, you can be fully unemployed for a whole tax year and still make the maximum contribution, as long as you receive unemployment benefits (because they are OASI elligible).

The only case in which you are earning an OASI-elligible income and could not pay the maximum pillar 3a contribution is if your income in a tax year is less than the maximum pillar 3a contribution. In that case, the deduction would be reduced.

If you do not earn an OASI-elligible income (Salary, self-eymployed income, or unemployment benefits), then you cannot pay into the pillar 3a.

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That is up to each tax office to decide.

From a purely law-based standpoint, you can contribute up to age 65 (up to age 70 if you remain employed), and you can withdraw between age 60 and age 65 (age 70 if you remain employed). So theoretically, you have a period of up to 10 years in which you could contribute and withdraw in the same tax years.

But tax offices can make the call if they suspect deliberate tax avoidance. As an employee, you are less likely to have issues doing this because the tax savings are not very significant. But those who claim the bigger pillar 3a contributions for people without pension funds are more likely to have issues because the tax savings can potentially be much bigger.

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