Have you paid too much into pillar 3a? No problem. You can have the excess money paid out again.
What do you have to do for a refund?
There are two cases that need to be distinguished:
1. correction of the 3a deposit in the following year
Initial situation: You have paid an amount into pillar 3a and listed this as a deduction in the following year’s tax return. The tax authorities have now informed you that you have paid in too much and that you must claim back the excess amount.
What you have to do: In order to get the excess amount back from your 3a provider, you must forward the letter from the tax authority to your 3a pension fund. The 3a foundation will ask for your account details and pay the excess amount into this account.
What to do if the money is invested in 3a funds: If you have invested the money in 3a funds, it is of course not so nice if your pension fund has to pay back the money. In order to do so, it would have to sell the fund units. You might also want to pay in the repaid amount again for the new year.
We at finpension therefore regulate this in a way that in such cases the surplus deposit can be carried over to the new year (without liquidation of the investments). Then this transferred deposit is “taken” on the tax certificate of the new year and can be deducted from the taxes in this year.
Of course, this procedure requires that they also have an income from working that is subject to AHV contributions in the new year.
2. correction of the 3a deposit in the same year
Initial situation: You have paid an amount into pillar 3a. Either yourself or your 3a foundation have discovered immediately afterwards that you have paid in more than the maximum permissible amount for the year in question.
What you have to do: Provided that the excess amount can be repaid in the same year, there is no need for a certificate from the tax authorities. You can have the excess amount paid into an account.
Difference: 3a account, 3a fund or 3a insurance solution
In the case of a 3a account, you get back the entire surplus amount. With a fund, it depends on how the value of the fund has developed since you paid in. With an insurance solution, you only get back the savings portion. As a rule, you can no longer reclaim the portion for risk coverage.
Repayment of the ordinary contribution not possible
If you have not exceeded the maximum amount possible for tax purposes with your deposit, you can only withdraw the money from the 3rd pillar again in exceptional cases:
- Taking up self-employment.
- Purchase of an owner-occupied residential property (WEF advance withdrawal) or amortisation of a corresponding mortgage as well as participation in a housing cooperative.
- Emigration from Switzerland.
What would happen if you do not reclaim the excess amount despite the tax authority’s request?
There are tax authorities who want to see a confirmation from the bank or insurance company that the money has effectively been repaid.
Other tax authorities do not require such confirmation. They may also ask you to repatriate the money, but they do not do an enforcement check. With these tax authorities, it would therefore be possible to leave the surplus in the pillar 3a.
However, this approach is not really recommended for the following reasons:
- The excess amount cannot be deducted from taxable income.
- You pay capital gains tax on the withdrawal and also on the portion of the assets derived from excess payments.
It is true that the money in Pillar 3a has the advantage that it is not counted as taxable assets and the income is not counted as taxable income. An excessive deposit that is not reclaimed would therefore be withdrawn from the tax authorities during the entire investment horizon. However, because this withdrawal is unjustified, it would have the character of dirty money during this period.