Revised private benefit plan

Private retirement benefit plan

Agreement where employer provides benefits upon retirement.

Tax qualified plan

Retirement plan duly approved by BIR and issued tax qualification for exemption.

Trusteed retirement plan

Funds held, managed, and administered by separate entity or group of individuals designated as trustee.

Application for certificate of qualification for tax exemption

30 days from effectivity date of retirement benefit plan, to the legal and legislative division at BIR national office.

Exemptions to income tax and withholding tax

• Retirement benefits received by qualified retiring employees

  • At least 10 years in service for the same employer

  • At least 50 years old

  • Has not previously availed unless involuntarily taken (injuries, reached retirement age)

• Investment or trust income from retirement fund.

  • Not exempt if funds are not strictly used for employee’s’ benefit

Deductibility of contribution

Employer’s contribution to the retirement fund are deductible to gross income, where normal costs are fully deductible while past services (excess of normal) are amortized over 10 years.

Tax incentives of tax qualified plan

Incentives retroactive at date of effectivity of retirement benefit plan, where if application is denied by BIR, the employer is solely liable for deficiency and withholding due.

Filing of returns

The trustee must file annual information return and copy of issued certificate of qualification, on or before April 15 of each year to the revenue district office where employer is registered.