Tax benefits of Swiss pillar 3a

What are the tax benefits of the Swiss third pillar (3a) of retirement savings?

Hi there,

Saving using the 3a retirement savings category has a number of tax benefits:

1. Income tax deduction. Contributions to 3a retirement savings can be deducted from your taxable income.

2. No wealth tax. Assets held in 3a retirement savings solutions are not subject to wealth tax.

3. Lower taxes for withdrawn 3a retirement savings. When you withdraw your 3a savings, the money is taxed at a lower rate than your regular income. You can withdraw 3a assets up to 5 years ahead of legal retirement age or when you fulfill certain other criteria (when you leave Switzerland, for example). Tax rates vary between cantons, so relocating to a low-tax canton before retirement or opening 3a accounts in low-tax cantons if you expect to leave Switzerland before you retire can save you a lot of money in some cases.

Using multiple 3a bank accounts or life insurance policies is recommended if you expect to save a large amount of money. 3a accounts and policies must be cashed out in full in one go, so using multiple accounts lets you stagger closures and avoid receiving too much money at once - which could push you into a higher tax bracket.

Best regards from Moneyguru

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