A pension plan is a saving program oriented to the retirement. The investor makes periodic contributions that allow him to have capital, generally, at the time of retirement.
Although, pension plan are associated to tax savings, when we talk about rescue it, there isn’t relation with paying less taxes. In this article we will inform you more about the concept of rescuing you pension plan.
When can you rescue a pension plan?
Unlike other long-term investments for retirement, you can only rescue a pension plain in certain moments that the Law determines. This way avoids the retirement when the investor has the need.
Situations where the pension plan can be rescued are:
- Beneficiary’s retirement. In fact, the purpose of these plans is to be removed when the investor retires.
- Death of beneficiary.
- A total employment disability caused by serious illness.
- Long-term unemployment (over 12 months).
- To prevent the eviction of the house. The money should be allocated to debt repayment.
Ways to rescue the pension plan
There are 4 ways to rescue a pension plan:
- Capital way: It covers all rights one time and with only one single payment.
- Income way: Charge only one amount agreed monthly, quarterly, semiannual or annual. Let liquidated the pending balance at any time.
- Mix way: Charge one part in capital form and the other by income form.
- Guaranteed income or insurance way: Charge an income for life regardless of capital you have in the pension plan.
How can we rescue the pension plan to pay less to the Tax Agency?
Retirees between 2009 and 2014 can recover the money as capital until eight years after retirement enjoying a 40% reduction on parts of the contributions prior to 2007. That year eliminated this advantage, except for País Vasco and Navarra. This can only be done once, which means that if you have two pension plans, you have to rescue in the same fiscal year.
To know which taxation involves each way of rescue the pension plan, we recommend you that you contact with you bank or agency. There also rescue pension plan simulators that allows you to have an idea.
If you need advice on how to rescue a pension plan in order to get the biggest benefit as possible contact GM Tax. We will analyze your particular case to find the solution that will report you higher profits.