IKZE

IKZE, short for Indywidualne Konto Zabezpieczenia Emerytalnego, is a voluntary private retirement saving account in Poland, part of the country’s third pillar of pension provision. It is designed to supplement the state pension by encouraging long-term private savings.

Tax treatment and limits: Contributions to IKZE are tax-deductible up to an annual limit set by law, and the deductible amount reduces the contributor’s current-year taxable income. The investment growth inside the account is tax-deferred. Withdrawals from IKZE are subject to personal income tax at ordinary rates when the funds are taken, typically after reaching retirement age. Early withdrawals may incur penalties or different tax treatment, depending on the rules in force.

How it works: IKZE is offered by banks, asset management companies, and other financial institutions. Funds placed in IKZE can be invested in a range of permitted instruments, such as investment funds, government or corporate bonds, and other securities. The account is portable between providers, allowing transfers with minimal tax consequences. Contributions can be planned to optimize both current-year tax relief and future retirement income.

Comparison with IKE: IKZE is one of the two main private pension vehicles in Poland’s third pillar, alongside IKE. The key difference lies in tax treatment: IKZE offers tax-deductible contributions, with withdrawals taxed as ordinary income, while IKE contributions are not deductible, and withdrawals are tax-free under qualifying conditions. Both accounts aim to increase retirement income and encourage long-term saving, though their tax implications differ.

Eligibility and inheritance: IKZE is available to residents subject to applicable tax and reporting rules. Upon death, the account and its assets can be inherited by designated beneficiaries according to the holder’s arrangements and legal rules.