“Last deadlines for paying capital from your life insurance into a PER under advantageous tax conditions”

Since 2019, holders of life insurance contracts over 8 years old have had the option of buying back the capital present on these contracts to pay these sums into their Retirement Savings Plan (PER).

What are the advantages ?

  • Take advantage of an exemption on the earnings of the sums redeemed from the life insurance contract, of a maximum of €4,600 for a single person or €9,200 for a couple and per year.
  • Also take advantage of the current annual allowance of €4,600 or €9,200, which will mechanically double the tax benefit, bringing it to €9,200 for a single person and €18,400 for a couple.
  • To be able to deduct from the overall taxable income of the household in 2022, these sums from life insurance contracts and transferred to the PER. The higher the marginal tax bracket, the greater the tax savings.
  • Take advantage of this to allocate the sums that have not been paid into retirement savings schemes in the last 3 years and which will be fully deductible from 2022 income. This information is available on your tax notice in the “ceiling” section. retirement savings”.

What are the conditions to be met?

  • The life insurance contracts concerned by these redemptions must be more than 8 years old.
  • The redemption followed by the transfer to the PER must take place at least 5 years before the legal retirement age of the beneficiary; on the basis of 62 years, i.e. before his 57 years.
  • All of the capital bought back (net of tax) must be reinvested in the PER no later than 31/12/2022.
  • To benefit from the deduction of the sums, thus paid on the PER, from the global income 2022, it will be necessary to respect the limits provided for this purpose.

to know

For employees:

  • This ceiling is 10% of income from professional activity, which is itself capped at eight times the annual social security ceiling (PASS).
  • That is a maximum deduction of: €32,908 for contributions paid in 2022.

For independents:

  • 10% of earned income plus 15% for the part of income that exceeds the annual social security ceiling, within the limit of 8 annual social security ceilings (PASS), i.e. a maximum deduction of €76,102 for 2022 .
  • 10% of the PASS, i.e. €4,113 for those whose income is less than 1 PASS.

What are the other points of vigilance?

  • It should not be forgotten that the savings replaced on the PER is no longer available until the legal retirement age, unlike the life insurance contract. It is therefore essential to keep sufficient cash in the assets in case of need.
  • At the time of retirement, the withdrawal, if it is made in capital for example, will be taxed for the part of the sums deducted from taxable income 2022: the part of the payments to the PER in respect of retirement pensions (but without any allowance ), and the share of gains in the PFU**. However, it is likely that the TMI applied in retirement is lower than that applied in activity (but this point must be verified). The tax advantage will generally remain higher in this case.
  • Finally, if the PER takes on the character of “insurance”, in the event of death after the age of 70, the 757B (reduction of €30,500) will apply to all of the savings remaining on the PER, regardless of i.e. the age of the insured at the time of the payment in the contract and not only on the premiums paid after his 70th birthday. Consequently, the sums withdrawn from the life insurance contract and which would have benefited from the 990I (deduction of €152,500 / beneficiary) will again be integrated into the estate, from the age of 70 and after deduction of €30,500 (deduction common to the beneficiary). life insurance and PER). If the beneficiary is the spouse, the latter having no inheritance tax to pay on the assets from his spouse, the estate tax impact is non-existent; on the other hand, if the spouse predeceases or if the beneficiaries of the PER have another family relationship with the insured, an estate balance sheet is required in order to measure the impact.

Only a few months left to enjoy it

This operation can therefore be an opportunity with the aim of preparing for retirement, while optimizing the tax impact. To do this, it must be orchestrated within the framework of an in-depth study of retirement needs, existing gains on life insurance contracts, the current (and retirement) marginal tax bracket, and finally inheritance impact.

Last advice: there are only a few months left to take advantage of it, the system will end on January 1, 2023, which means that the redemption of life insurance contracts and their repayment on the PER must be effective on December 31, 2022 at the latest. .

** : or the progressive scale of tax, to which will be added social security contributions at the current rate of 17.2%.

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