Amendment 190: an investment tool with retirement tax benefits
Amendment 190 allows people age 60 and over who meet the legal conditions to invest available money in a provident fund and benefit from tax advantages, investment flexibility and easier transfer to beneficiaries. This page explains the eligibility conditions, capital and pension withdrawal options, and the limitations and fine print to understand before depositing.
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For retirees and older adults who hold available sums of money in the bank from retirement compensation, selling a property or an inheritance, the greatest challenge is finding an investment that preserves the money, earns a returnThe profit (or loss) from an investment over a certain period, usually expressed as a percentage of the original amount invested. and, no less importantly, is not swallowed by income tax.
Tikun 190 (תיקון 190), Amendment 190 to Israel's Income Tax Ordinance, was created precisely to solve this problem. It allows private money to be deposited into a regular provident fund, Kupat Gemel (קופת גמל), while benefiting from a unique tax track, attractive management fees and major advantages when transferring the money to the next generation. However, the state has set strict entry conditions that must be understood before transferring the money.
The entry ticket: what conditions must be met?
To deposit money under Amendment 190 and later withdraw it with the tax benefits, you must meet both of the following conditions:
- Age
- You are over age 60.
- Minimum pension
- You actually receive a minimum monthly pensionThe monthly amount paid to the saver in retirement, calculated by dividing the amount accumulated by a "conversion factor." from some source. In 2026, this amount is about ₪5,309 per month.
The advantages of Amendment 190
If you meet the entry conditions, depositing available money through Amendment 190 gives you several advantages that are difficult to find in ordinary bank or stock-market investments:
- Reduced capital gains tax: Unlike most investments, such as mutual fundsAn investment vehicle that allows many investors to pool their money into a shared portfolio of assets managed by a professional. or stocks, where you pay 25% tax on the real gainThe actual gain remaining from an investment after deducting the rate of inflation., Amendment 190 charges only 15% tax on the nominal gainThe "raw" monetary gain without taking into account the decline in the value of money due to inflation. when making a lump-sum withdrawal. When inflationA process of general price increases that reduces the purchasing power of money (the same amount of money buys fewer products). is low and returns are high, this can create substantial tax savings.
- Option to receive a tax-exempt pensionA monthly payment made to a person after retirement from work in order to help maintain their standard of living.: If you choose not to withdraw all the money at once but convert it into a monthly pension that supplements your existing pension, the money is fully exempt from income tax and capital gains tax.
- Complete tax exemption when switching tracks: You can move between investment tracks, such as from stocks to a conservative track, and even transfer the money between investment houses. These moves are not tax events, so the money continues earning returns without tax being deducted along the way.
- Competitive management fees: Because provident funds manage very large amounts, their management fees are usually lower and more cost-effective than a managed investment portfolio at a bank or a savings policy.
- Leverage and loan options: Some managing institutions allow an attractive loan backed by the provident-fund money, on terms that tend to be better than ordinary bank credit.
Intergenerational transfer: how does the amendment protect the children's inheritance?
One of the most popular advantages of Amendment 190 is using it for smart inheritance planning and transferring family wealth to children or beneficiaries under favorable tax terms:
- Death before age 75
- The beneficiaries may withdraw all the money, both principal and accumulated gains, with a complete capital gains tax exemption.
- Death after age 75
- The beneficiaries step into the deceased person's position. If they withdraw the money as a lump sum, they pay only 15% nominal taxTax calculated on the total gain without offsetting the effect of inflation (for example, 15% on a money market fund). on the gains instead of 25% real tax.
The fine print: limits and money that may be locked
Alongside the advantages, Amendment 190 has strict rules and limitations that must be considered to avoid costly mistakes:
Who might it suit?
Amendment 190 is not an off-the-shelf product for everyone, but it can be an excellent solution for:
- Retirees with liquid capital in a current account or bank deposits who want to pay less tax.
- Savers over age 60 who have already secured a stable monthly pension and want to invest an additional sum without the state taking 25% capital gains tax when it is sold.
- Parents or grandparents who want to invest their money now while planning the most economical transfer of the inheritance to the next generation.
Frequently asked questions
Does Amendment 190 suit everyone?
It is intended mainly for people over age 60 who receive a minimum pension in accordance with the conditions set by law.
Which is better, withdrawing as capital or as a pension?
There is no single answer. A pension provides a complete tax exemption and steady cash flow, while a lump-sum capital withdrawal provides immediate liquidity of a large amount at a reduced nominal tax rate of 15%. The choice depends on your personal needs and other sources of income.
Can I switch tracks without tax?
Yes. As with a regular provident fund, you can move between investment tracks and even transfer between managing institutions without creating a tax event.
Can I deposit money after age 75?
Yes. There is no age limit on making the deposit itself. As long as you meet the minimum pension condition, you can also deposit at older ages.
Can my children withdraw the money immediately if something happens to me?
Yes. Money under Amendment 190 is not locked after death. The beneficiaries named on your forms can withdraw it according to the relevant age window, before or after age 75, and receive the tax benefits legally available to them.
In summary
Do not leave your available money to erode in fixed bank deposits or under high taxation. If you are over 60 and eligible for the minimum pension, Amendment 190 is one of the most powerful tools available for maximizing returns and preserving family wealth. However, as with any significant financial decision, it is important to understand the limits, check whether it suits you personally and examine the full picture before deciding.