IBKR vs Pillar 3b

[georgewaini]

Hi all,

This topic is widely discussed on other threads but I would like to gather more, ideally up to date, opinions.

I have most of my savings in VOO + V T with InteractiveBrokers. My tax accountant recommended energetically to move some of that (if not all) to pillar 3b claiming that:

- If I sell on IBKR, I pay a reduced income tax rate on the sell price (even if I already paid wealth and income taxes in the first place).

- If I retire all the money after 60, I do not have to pay those reduced taxes.

- If I retire part of the money before 60, I also do not have to pay those reduced taxes.

- Dividends are not taxes on pillar 3b

- He also ensures that I would end up paying less costs than IBKR

I would like to know your opinions here. If the investment portfolio is rather similar, aren't the tax benefits, specially the dividens one, attractive?

What are the downsides of pillar 3b?

Thank you!

 

[mandofett]

@georgewaini There is no capital gains tax in Switzerland and I don’t think you can just more assets in your 3rd pillar account.

The commissions at IBKR are minuscule.

It seems your accountant wants to screw you over

 

[ahdongliew]

@mandofett Yes it seems they are trying to sell OP into a life insurance

 

[georgewaini]

@mandofett They didn't mean capital gains, they meant "wealth tax at reduced rate on the value sold" apart from the wealth tax.

 

[bulletproof3]

@georgewaini the wealth tax is so small that it doesn’t matter to consider it when making any investments. On 50k you will save maybe 50fr a year in wealth tax by investing your funds poorly in a 3b with diminished returns.

Stay with VOO and VT.

 

[mandofett]

@georgewaini What does reduced rate on the value sold mean? Wealth tax is minuscule

 

[georgewaini]

@mandofett I will ask more in detail.

 

[mandofett]

@georgewaini Please do and get back to us, I have a bad feeling they want to screw you over with some life insurance bullshit

 

[bulletproof3]

@georgewaini ask him to tell you or calculate with you exactly how much are you saving and you’ll be amazed that he’s talking about peanuts

 

[georgewaini]

I wonder why the downvotes though.

 

[cindergames]

@georgewaini Either you have misunderunderstood your tax advisor, or he is lying to you. Pillar 3b does not really exist. It is your savings in a normal taxable account, basically your free available savings. There is no tax advantage. See more about this here:
https://www.postfinance.ch/de/blog/...VVJtQBh2FnwOrEAAYAiAAEgLeffD_BwE&gclsrc=aw.ds
Furthermore in Switzerland, there is no capital gain tax. So, if you sell your stuff on IBKR, you don't need to pay taxes, not today, not later. You only pay income taxes on dividends and wealth taxes. The wealth taxes, you pay anyways (except for pillar 3a and pillar 2).

 

[georgewaini]

@cindergames I found this: https://www.postfinance.ch/en/private/retirement-planning/retirement-savings-information.html

"For example, payouts from 3b life insurance policies are generally tax-free (specific rule for unit-linked life insurance and single-premium life insurance)."

So yes, it could be a life insurance plan but seems to have some tax benefits.

 

[larapinta]

@georgewaini Isn't that when you die?

 

[cindergames]

@georgewaini Basically every insurance can offer you tax free products. These are more or less complicated structured products, avoiding dividend or interest payout to the end-customer.

 

[lasuisaac]

@georgewaini A good 3b life insurance has a good dividend or interest strategy. Because in 3b life insurance interest and dividends are tax free. The insurance part is rather low. For example you invest 100‘000 once, then the insured death amount would be 105‘000. this is done so that the cost of the insurance is rather low.

In the end he is the tax accountant. So let him calculate two or three scenarios where the tax benefit is included. It can be worth it.

 

[georgewaini]

@cindergames I saw this other post saying something similar to what I have been told:

https://www.reddit.com/r/SwissPersonalFinance/comments/1bpu87n/_/kwz3166

Seems a lot of coincidence for false information.

 

[cindergames]

@georgewaini I assume they are talking about insurance products. You can have insurance products in your "pillar 3b" just like you can have them in your pillar 3a. But these products usually have very high costs. As they are structured products, they are probably dividend free and therefore taxfree. But you have a huge counterpart risk. If your insurance goes bust, you lose most probably everything. What did your tax advisor recommend exactly? A specific insurance product?

 

[bhaskyjhn]

@georgewaini 3b is just a naming for everything else outside of classic pillars. It's not tax advantaged. Your money on ikbr is already 3b. Either the advisor is acting in bad faith to sell you some bank service to get a cut or you misunderstood them. The only relevant advice is to fill your 3a since it has tax advantages and you can invest 3a in stocks similar to ikbr with some providers like viac or finpension

 

[pilgrimsong]

@georgewaini I just love all the wrong information that's being spouted around in here. People listened to a few podcasts and read a few blogs and now think they are experts.

It's most likely not worth it for you to switch to a 3b, if you don't actively want the insurance part (premium exemption) or have a short enough time horizon (10 years).

Do you have a document of what he's offering you?

 

[branden]

@pilgrimsong This. Obviously, some have no clue of the advantage of 3b policies, or as I call it my favorite 3b ETF-Wrappers
Tax free and reinvested dividends, waiver of premium, inheritance privilege for non married couples - it’s not that easy as „VT and chill“ especially if you consider a holistic tax approach