Actinver::Plan176

Personal Retirement Plan (176)

Personal Retirement Plan (176) establishes the application of a personal deduction in the year that corresponds to the payment of taxes, at a determined amount, converting it into an important tax planning instrument and promotion of saving for retirement.

How does it work?

The Personal Retirement Plan (176) is a personal retirement plan that can be applied together with the Special Savings Account (218).
The maximum amount that can be contributed in one year is the equivalent of 10% of the accumulated income in any given year without exceeding 5 times the minimum salary in the geographical area in which the contributor resides.
The contributions and the returns generated are exempt from tax as long as they remain in the account, and the money derived will also be exempt after the contributor´s 65th birthday or in the event of disability or incapacity according to the social security laws (the client needs to present the relevant documentation).
The fiscal year is considered to run from January to December.
In the case of anticipated retirement, it is considered as accumulated income in the annual tax declaration.
There are two retirement options
1. Contributions maintained for up to 5 fiscal exercises.
  
  The withdrawal of deducted and of the real interest divided by the number of years in the retirement plan. The resultant amount is accumulated as taxable income and from this the tax rate is determined.
2. Contributions maintained for more than 5 fiscal exercises.
  
  The corresponding withdrawals including both the contributions deducted and the real interest, will contribute to the average rate of the 5 previous fiscal exercises.
The system will emit and send by mail at the end of the year an account statement which will serve as proof and will accredit that the holder has complied with the established provision laid down by article 176 if the Income Tax Law.

Comparison between Article 176, fraction V and Article 218

Article

Concept

Amount

Retention

Acummulated Return

Anticipated Withdrawal

Pension able Taxes

176-V

Personal deduction for the contributions to the personal retirement
plan.

Up to 10% of the accumulated income in any given year without exceeding 5 times the minimum salary. The current applicable amount in Mexico City is MXP $92,290.25 for example.

Exempt from tax retention over the amount that interest is calculated.

Real interest is accumulated only if it is withdrawn at the age of 65.

To avoid accumulation it must be withdrawn at the age of 65.

SAT Authorization..

Contributions and the real interests on a 10th part basis (10 years) will be added to the rest of the personal pension revenues and an exception over 9 times the minimum salary will be applied; whatever exceeds will be considered as accumulated revenue.

218

Tax benefit over a special retirement personal account where investment funds are acquired.

Deductible up to MXP $152,000

Retention is effective over invested amount and interest at the time of withdrawal.

Capital and returns are accumulated when withdrawals are made.

It can be withdrawn only after 5 years invested.

Amount invested in funds is considered accumulated in the exercise that is retained.

Use the Personal Retirement Plan (176) Calculator.