Independent Management of Provident & Study Funds

Feel like you should be getting more from your savings? Portfolio not getting the attention it deserves? Bank of Jerusalem and Kal Gemel Provident Funds are pleased to present an  an innovative investment instrument.

What is an individual retirement account (IRA)?

An individual retirement account, or IRA, is a pension product that lets you manage your provident fund or study fund investments independently, or via your selected portfolio manager. This means that you can manage your own provident fund, consult with a trusted advisor at your bank, or select the portfolio manager you believe will best manage your savings.

What is Kal Gemel Provident Funds?

Kal Gemel Provident Funds is part of the FMR Group, the leading software house that provides advanced trading platforms for the capital market. Established in May 2012, Kal Gemel is fully licensed by the Ministry of Finance to manage IRAs. The company's goal is to function as a legal and operational infrastructure for IRAs and to provide this platform as a service to portfolio managers*.

Kal Gemel operates state-of-the-art computer systems to provide a full end-to-end service: personal area for IRA holders, portfolio management system, investment policy management system, interfaces for banks, stock market members, and trading platforms, reports for IRA holders, and end systems for IRA holders that can be accessed via the internet and mobile apps.

Transferring Your Provident Fund to an IRA

By transferring your current provident fund to an IRA, you can create the provident fund that suits you best, based on your personal needs, preferences, and risk appetite.

Why should I switch to an IRA?

• Improved tax planning abilities.
• Complete transparency – you can view market data and your portfolio breakdown at any given moment.
• Ability to respond to market fluctuations immediately – buying and selling assets within the same trading day.

Who can switch a provident fund to an IRA?

• Those who have an independent provident fund with deposits prior to 2008.
• Those who have any kind of study fund (salaried or self-employed, active or inactive fund).
• Those who have an independent provident fund with deposits after 2008, provided that the funds come from an inheritance or compensation (up to a limit of approximately NIS 3,200,000).

Managing Savings with an IRA (Amendment 190 to the Income Tax Ordinance))

Managing your savings via an IRA, rather than via a bank account, enables you to enjoy many advantages:

• No current tax payments.
• Pension withdrawal from the age of 60, with full tax exemption.
• Option for a one-time lump-sum withdrawal, less 15% nominal tax on accumulated profits, subject to maintaining a minimum pension from retirement age (67 for men, 62 for women).
• Intergenerational transfers – the beneficiaries of the deceased account holder may receive the funds as an annuity with full tax exemption, or as a lump sum, less 15% nominal tax on accumulated profits.
• Low trading fees.

When can I open an IRA (without transferring an existing provident fund)?

• If you receive a regular paycheck, you can open an IRA under independent status. The closer you are to retirement age, the more attractive it is to manage your savings via an IRA. You can currently deposit any amount you like into this type of account.
• If you have pension savings greater than the "determining amount" (value of approximately NIS 810,000, as of January 1, 2016) in a non-IRA provident fund, or you receive a pension from a pension fund, or you are receiving a budgetary pension in an amount no less than the "minimum pension amount" (approximately NIS 4,500, as of January 1, 2016), you can deposit up to 4 times the "determining amount" (approximately NIS 3,200,000, as of January 1, 2016) in an IRA.