Mad Hon · Keren hishtalmut

Choose between a keren hishtalmut and a kupat gemel le'hashkaa

Choose between a keren hishtalmut and a kupat gemel le'hashkaa. A step-by-step Mad Hon guide for your Keren hishtalmut score, written for olim.

1. Put the two side by side.
A keren hishtalmut exists where your employment terms provide for it, or where you open one as a self-employed person. An employer that runs one contributes alongside you, and deposits inside the recognised ceiling are not treated as income in the month they are made. A kupat gemel le'hashkaa, a provident fund for investment, is opened by anyone with any Israeli bank account, funded from money that has already been taxed, with no employer side and an annual deposit ceiling per person.
2. The tax treatment is where they separate.
A keren hishtalmut carries two breaks: the deposit inside the ceiling is not taxed as income when it is made, and once the account is six years old the growth comes out without capital-gains tax. A kupat gemel le'hashkaa carries one, and it is later: growth is taxed when you take the money as a lump sum, or exempt from that tax if you convert the balance into a lifetime annuity from age 60. Both have ceilings and both ceilings are updated annually, so check the current figures with the Tax Authority before you set a monthly amount.
3. Liquidity is where they swap places.
Before six years, a keren hishtalmut is not free money: the exemption is not there yet and the Ordinance allows an early withdrawal without tax only in narrow cases. A kupat gemel le'hashkaa can be withdrawn at any age as a lump sum, with tax due on the growth, and that availability is the main thing it sells. If the money might genuinely be needed, that difference matters more than the headline tax rate.
4. Work out which comes first, and why it is rarely either/or.
Where an employer contributes to a keren hishtalmut, that contribution has no equivalent anywhere else on this list, which is what usually puts it first. A kupat gemel le'hashkaa is the layer that makes sense once the keren ceiling is reached, or where there is no employer contribution to have, or where you want money that is reachable before retirement. Plenty of households run both, for different jobs.
5. Open them in the right place, and compare on the same two numbers.
A keren hishtalmut runs through payroll where your terms provide for one, and directly with a fund manager if you are self-employed. A kupat gemel le'hashkaa you open yourself with a fund manager. In both cases the account is yours, the management fee is negotiable, and there are two fees to ask about separately: the annual charge on the balance and the charge on each deposit. Ask for three to five years of returns on the specific track rather than one strong year, and remember the track can be changed later at no cost.
6. Ask how your home country will treat it before you open one.
An ISA, a TFSA, a 401(k) and an RRSP are each their own wrapper, and none of them maps onto these. If you still file a tax return where you came from, and a US citizen files one wherever they live, ask an adviser who works both systems how a foreign fund is reported before you open it rather than after. This is a reporting question with real answers, not a reason to avoid the account.

Choose between a keren hishtalmut and a kupat gemel le'hashkaa. A step-by-step Mad Hon guide for your Keren hishtalmut score, written for olim.

1. Put the two side by side.

A keren hishtalmut exists where your employment terms provide for it, or where you open one as a self-employed person. An employer that runs one contributes alongside you, and deposits inside the recognised ceiling are not treated as income in the month they are made. A kupat gemel le'hashkaa, a provident fund for investment, is opened by anyone with any Israeli bank account, funded from money that has already been taxed, with no employer side and an annual deposit ceiling per person.

2. The tax treatment is where they separate.

A keren hishtalmut carries two breaks: the deposit inside the ceiling is not taxed as income when it is made, and once the account is six years old the growth comes out without capital-gains tax. A kupat gemel le'hashkaa carries one, and it is later: growth is taxed when you take the money as a lump sum, or exempt from that tax if you convert the balance into a lifetime annuity from age 60. Both have ceilings and both ceilings are updated annually, so check the current figures with the Tax Authority before you set a monthly amount.

3. Liquidity is where they swap places.

Before six years, a keren hishtalmut is not free money: the exemption is not there yet and the Ordinance allows an early withdrawal without tax only in narrow cases. A kupat gemel le'hashkaa can be withdrawn at any age as a lump sum, with tax due on the growth, and that availability is the main thing it sells. If the money might genuinely be needed, that difference matters more than the headline tax rate.

4. Work out which comes first, and why it is rarely either/or.

Where an employer contributes to a keren hishtalmut, that contribution has no equivalent anywhere else on this list, which is what usually puts it first. A kupat gemel le'hashkaa is the layer that makes sense once the keren ceiling is reached, or where there is no employer contribution to have, or where you want money that is reachable before retirement. Plenty of households run both, for different jobs.

5. Open them in the right place, and compare on the same two numbers.

A keren hishtalmut runs through payroll where your terms provide for one, and directly with a fund manager if you are self-employed. A kupat gemel le'hashkaa you open yourself with a fund manager. In both cases the account is yours, the management fee is negotiable, and there are two fees to ask about separately: the annual charge on the balance and the charge on each deposit. Ask for three to five years of returns on the specific track rather than one strong year, and remember the track can be changed later at no cost.

6. Ask how your home country will treat it before you open one.

An ISA, a TFSA, a 401(k) and an RRSP are each their own wrapper, and none of them maps onto these. If you still file a tax return where you came from, and a US citizen files one wherever they live, ask an adviser who works both systems how a foreign fund is reported before you open it rather than after. This is a reporting question with real answers, not a reason to avoid the account.