Riester pension terminated: tax return
The Riester pension is a very popular model that many people use for their retirement provision. However, anyone who has terminated this contract must know that he must state this in the tax return. Tax benefits already granted must be reimbursed. For this reason, the termination is always very disadvantageous.
The terminated Riester pension and its effects on the tax return
Basically, you can use the Riesterpension for your retirement provision save and then receive the state allowances. As soon as the retirement pension is paid out, the full amount is taxed.
- If the pension contract is terminated in advance, the allowances granted by the state must be repaid. You then have to wait a few weeks before you receive the repayment notice. You will always be deducted a processing and reversal fee. In the end, you will not even get back the full installments that you have paid up to that point in time. You will receive a form with information on your annual income tax adjustment. Read this through and follow the instructions.
- For the tax return, you should know that taxation only takes place after the payment period. There is no taxation while you are paying the contributions.
- During the payment period you will receive the state allowances on the credit. These are also taxable from the time they are paid out. With the assessment from Tax office no distinction is made between the savings component and the income component.
- Note that taxation does not occur until you retire. If you cancel the contract in advance, the state allowances will be withheld. The Riester products differ from the state pension scheme, as this is fully taxed In the case of the state pension, on the other hand, only the personal income portion of 50% is taxed proven.
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Notes on private pension provision
who the Riester pension has quit, has certainly lost some losses in the tax return, since the entire credit is taxed. However, this shouldn't prevent you from making your personal retirement savings.
- It is very worthwhile to buy your own property. In this way, you can benefit from the rental income until it is amortized and save the rent in old age when you move into your house.
- It is also interesting to provide for old age by investing in Funds to implement. However, you should only do this if you can accept financial losses and want to invest for the long term. Anyone who does not invest in funds for at least five years will find it difficult to make a profit.
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