Form 161 (Employer)
The employer completes Form 161 detailing: the employee's tenure, final salary, total severance entitlement, amounts deposited in pension/severance funds (Section 14), and any additional grants. This form is given to the employee and sent to the ITA and pension fund.
Form 161A (Employee)
The employee completes Form 161A choosing the tax treatment for severance and pension fund withdrawals. Options include: claiming the tax exemption (up to ceiling), electing to spread taxable amounts over 6 years, or requesting full taxation in the current year. The choice should be made with professional advice as it is difficult to reverse.
Critical Decisions on Form 161A
- Whether to withdraw severance from pension fund or leave it for retirement
- Whether to claim the exemption on statutory severance
- Whether to spread excess amounts over 6 years
- Whether to roll pension funds into a new employer's plan
- Whether to convert severance to an annuity for tax-free withdrawal
בסיס חוקי
- Income Tax Regulations – Form 161/161A procedures
- Section 9(7A) – Severance exemption
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.