Amendment 190

Amendment 190 to the Income Tax Ordinance allows individuals to deposit available funds (for example, from checking accounts, fixed-term deposits or investment portfolios) into provident funds, enjoy all the benefits of a regular provident fund during the saving period, and withdraw the funds after age 60 in one of two ways: 

• As a tax-exempt monthly pension for life.
• As a one-time withdrawal with a 15% nominal capital gains tax on the proportional profit component, compared to a 25% real capital gains tax applicable to securities investments.

In addition, it allows for tax-exempt or partially tax-exempt inheritance, depending on the age at which the saver passes away. This will be elaborated on further below.

Therefore, Amendment 190 offers a highly attractive investment opportunity for individuals with available funds approaching age 60. However, it’s not just for them: the amendment is also great news for salaried employees with high incomes (twice the average wage in the economy or more) seeking a complementary long-term pension savings solution beyond the tax benefit deposit cap.

There is no defined minimum deposit amount, but a portion of the deposit will be designated as qualifying pension funds.
For example, a deposit of ILS 500,000 under Amendment 190 for a recognized pension: Of this amount, ILS 38,412 will first be deposited into a provident fund account designated as qualifying pension funds.

This deposit can be withdrawn subject to the withdrawal rules for qualifying pension funds/pension capitalization, with tax assessor approval.

The remaining amount, ILS 461,588, will be deposited into an additional account in the provident fund designated as recognized pension funds. Only these funds will be subject to the terms of Amendment 190 related to recognized pension capitalization.

Funds designated as a “qualifying pension” (ILS 38,412 as of 2026) are liquid for withdrawal subject to tax assessor approval or as a tax-exempt pension, provided the beneficiary/heir is over 60. 
Funds designated as a “recognized pension” are the amount exceeding the qualifying pension funds.

If the member passes away before age 75, beneficiaries are entitled to receive the funds as a one-time sum fully exempt from tax for up to 90 days after the death. After that, the profit component will be subject to a 25% tax. This is a significant tax benefit that has attracted many savers to use Amendment 190 as a tax-exempt or partially tax-exempt inheritance channel, as detailed in the next scenario.

If the member passes away after age 75, beneficiaries can withdraw the funds as a one-time sum and pay a 15% tax on the nominal profit, based on the rights available to the member before their death. Alternatively, beneficiaries are entitled to receive the funds as a tax-exempt monthly pension, provided they are over 60. 

Here too, if the withdrawal occurs later than 90 days after the death, a 25% tax will apply to the real profits from that point onward.

The deposit will be made through bank transfer or check to a single provident fund but will be split into two components: 

1. An amount of ILS 38,412 (as of 2026) will be designated as a “qualifying pension” and can be withdrawn as a monthly pension. 
2. The remaining amount, ILS 461,588, will be designated as a “recognized pension” (as of 2026) and will be subject to the conditions of Amendment 190 to the Income Tax Ordinance for pension capitalization. This means it can be withdrawn as a one-time sum with a 15% tax on the nominal profit, without requiring tax assessor approval, or as a tax-exempt monthly pension.

Of course, as long as the deposit is not withdrawn, it will be managed in a completely standard provident fund, aiming for maximum returns and gains (based on the risk level of the selected investment track), with all associated benefits (see detailed advantages below).

1. The member is over 60 years old. 
2. The member receives a monthly pension exceeding the minimum pension amount as defined by law, approximately ILS 5,306 per month (as of 2026). 
3. Withdrawal is subject to capital gains tax and is possible for funds exceeding the preferential ceiling. Withdrawal up to the preferential ceiling (ILS 38,412 for depositors in 2026) requires tax assessor approval or can be withdrawn as a pension.

An unlimited amount can be deposited in a regular provident fund under Amendment 190, while up to approximately ILS 6,303,528 can be deposited in a personally managed (IRA) fund.

However, according to Tax Authority guidelines, for high deposit amounts (above ILS 7,000,000, depending on the member’s age at the time of deposit), withdrawal through recognized pension capitalization requires contacting a tax assessor directly rather than through the fund.