How is PPI refund paid?

How is PPI refund paid?

What happens if I stop paying into my pension plan?

Are you lost and don’t know how to do it? In these cases, the best option may be to turn to a financial advisor to help you with your finances and guide you on the best way to make your pension plan profitable.

One of the main characteristics and disadvantages of pension plans is that they are not a liquid product. In other words, the money cannot be withdrawn at any time. This is one of the tolls you pay for the tax advantages you have.

The pension plan is intended for long-term investments and more specifically for retirement. This does not mean that you cannot take the money out of the pension plan early, although there must be special circumstances to do so.

In case of total and permanent incapacity to work for the usual profession or absolute disability or great disability to carry out any type of work, it will be possible to recover the pension plan.

If you are wondering how to redeem the pension plan due to serious illness, it will be necessary to prove with a medical certificate from the Social Security or an authorized entity the physical or psychological condition that temporarily disables the development of the usual professional activity for a minimum period of 3 months and that requires a clinical intervention of major surgery in a hospital center. This category also includes physical or psychological ailments or injuries with permanent sequelae that partially limit or totally prevent the usual activity.

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Pension recovery

The recovery of a pension plan must be done intelligently. The money received counts as earned income for the tax authorities and, therefore, counts for personal income tax purposes. It is for this reason that it is necessary to evaluate how to do it so that fiscally it is more advantageous.

When you have to make the income tax return for the year 2021 we must take into account the changes applied in the IRPF brackets. Specifically, a new personal income tax bracket of 47% has been added for incomes over 300,000 euros.

So, the question is obvious: what is the best way to redeem the pension plan? The answer depends on each taxpayer and his or her personal situation. Here we are going to review some casuistry. Let’s take a look.

Taxation of pension plan redemption

The most common thing when contracting a pension plan is to think about how much you are going to save in your income tax return with your contributions. The reality is that pension plans pay taxes, and a lot of them compared to other products such as investment funds.

With a mutual fund, the way it is withdrawn has no influence on its taxation. With a pension plan the same does not happen and the difference can be thousands of euros in taxes. Moreover, choose wrongly how you recover your pension plan and you can squander the benefits of the best plan only in taxes.

Are you lost and don’t know how to do it? In these cases, the best option may be to turn to a financial advisor to help you with your finances and guide you on the best way to make your pension plan profitable.

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If you want to get an idea of the tax withholding for surrendering a pension plan, you can use this surrender simulator, which will tell you how much tax you pay for surrendering the plan in the form of capital or in the form of income. The tool is very simple and in a few seconds you will know at a glance how much tax you will pay for recovering your retirement savings.

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We believe that the most reliable way to obtain consistent returns is through long-term investments in well-managed, easy-to-understand and undervalued companies with significant appreciation potential and sufficient margin of safety. We apply this philosophy through mutual funds, which we believe are the most efficient vehicles for channeling investments.

Each participant owns a portion of the fund’s assets in proportion to the value of his or her contributions. This equity will increase or decrease depending on the performance of the various financial assets that make up the fund.

Redemption orders placed by the unitholder after 2:00 p.m. or on a non-business day will be processed together with those placed on the following business day. For these purposes, a business day is understood to be Monday through Friday, excluding holidays in the capital city of Madrid. No net asset value shall be applied to any transaction until the correct receipt of the documentation and corresponding certification. Those days on which there is no market for assets representing more than 5% of the net assets shall not be considered business days.

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