RMC No. 91-2026: The Base Amount for the 20% PERA Early Withdrawal Penalty

Revenue Memorandum Circular No. 91-2026 settles a question that mattered to every Personal Equity and Retirement Account (PERA) contributor weighing an early withdrawal: what exactly does the 20% penalty apply to? Issued August 11, 2026 and amending RMC No. 4-2023, it confirms the penalty base is the gross income earned on the specific PERA assets actually withdrawn — not the entire account, not unrealized gains left invested, and not income sitting in a sub-account the contributor didn’t touch.

The general rule: what makes a PERA withdrawal “early” #

A PERA withdrawal is “unqualified” — and therefore subject to the 20% penalty — whenever it happens before the contributor meets both the five-year holding period and age 55, unless it follows the contributor’s death. This threshold comes from Revenue Regulations No. 17-2011, the implementing rules for Republic Act No. 9505 (the PERA Act), which defines the concept this way:

“‘Early Withdrawal’ — refers to the withdrawal of PERA Assets, whether in full or in part, in such manner and at such time as to make the receipt of such PERA assets not a Qualified PERA Distribution.”

— Revenue Regulations No. 17-2011, Section 2(d)

A Qualified PERA Distribution, by contrast, generally requires that the contributor’s qualified contributions span at least five years and that the contributor has reached age 55 — or that the distribution follows the contributor’s death, regardless of how long the account existed. Anything short of that is an Early Withdrawal, and RR No. 17-2011 sets the consequence at 20% of the gross income earned on the withdrawn assets, plus recovery of the 5% tax credit the contributor claimed on those assets, for the period they were held. For the 5% tax credit itself — its rate, the ₱100,000 annual cap, and why it can’t be refunded in cash — see PERA Tax Incentives: How the 5% BIR Tax Credit Works Under RA 9505.

What RMC No. 91-2026 actually clarifies #

RMC No. 91-2026 is titled “Clarification of the Base Amount for the Imposition of the Twenty Percent (20%) Penalty Relative to the Early Withdrawal of Personal Equity and Retirement Account (PERA) Assets, Accounts and Sub-Accounts Classified as Unqualified, and Amending Certain Provisions of RMC No. 4-2023.” According to secondary tax-alert coverage of the circular, the operative clarification reads:

“Only the gross income earned attributable to PERA assets that are actually withdrawn shall be included in the EWP base, while gross income earned that remains invested, reinvested, or otherwise retained within the PERA shall be excluded from the EWP base, as such amounts have not been subject to an early withdrawal.”

(Quoted as reported by Manila Bulletin’s and BusinessWorld’s coverage of the circular — the BIR has not posted a directly fetchable copy of RMC No. 91-2026 to confirm this wording against the primary text at the time of writing.)

Two components make up the full Early Withdrawal Penalty (EWP) under this clarified base:

• 20% of the gross income earned attributable to the PERA assets or portion of assets actually withdrawn, measured from when that account or sub-account was opened up to the withdrawal date.
• Recovery of the 5% tax credit previously claimed with respect to those specific withdrawn assets, for the entire period they were held.

What’s explicitly excluded from the base: gross income that stays invested, reinvested, or otherwise retained within PERA — including unrealized gains and proceeds from selling or redeeming a PERA investment product that continue to be held under PERA custody. None of that counts as “withdrawn,” so none of it enters the penalty computation.

What changed from RMC No. 4-2023 #

Before this clarification, RMC No. 4-2023 left open how an early withdrawal from one PERA sub-account interacted with a contributor’s other sub-accounts — reporting on the circular describes RMC No. 4-2023 as having treated an unqualified withdrawal from one sub-account as terminating the others, an outcome RMC No. 91-2026 narrows. RMC No. 91-2026 forecloses the broader reading: a partial distribution’s 20% penalty and 5% credit recovery attach only to the targeted sub-account or portion of assets, while every other sub-account and underlying holding inside the same PERA structure stays intact and untaxed by that transaction. The circular also states that losses in one sub-account cannot be netted against the gross income earned in the sub-account actually withdrawn — each withdrawn portion is penalized on its own income, not a blended account-wide figure.

Worked example: withdrawing one sub-account, not the whole PERA #

Suppose a contributor opened a PERA account in 2024 with two sub-accounts through the same administrator — a UITF-linked sub-account and a mutual-fund-linked sub-account — and by September 2026 needs cash and withdraws only the UITF sub-account, well short of the five-year/age-55 qualified distribution threshold. Here is how the clarified base applies:

The contributor withdraws the full ₱168,000 in Sub-Account 1. Under RMC No. 91-2026’s clarified base:

Sub-Account 2’s ₱112,000 — including its ₱12,000 in gross income and the ₱5,000 credit already claimed on it — is untouched by this withdrawal. Before RMC No. 91-2026’s clarification, it was not settled whether Sub-Account 2’s income, or even its status, would be pulled into the same transaction; the clarified rule confirms it is not.

Frequently asked questions #

What is RMC No. 91-2026 and what does it clarify? #

Revenue Memorandum Circular No. 91-2026, issued August 11, 2026, clarifies the base amount for the 20% early withdrawal penalty on Personal Equity and Retirement Account (PERA) assets, accounts, and sub-accounts classified as unqualified, amending certain provisions of RMC No. 4-2023. It confirms that only the gross income earned attributable to the PERA assets actually withdrawn is included in the penalty base — not the full account value, not unrealized gains, and not income sitting in other sub-accounts.

What counts as an “early” or “unqualified” PERA withdrawal? #

Under Revenue Regulations No. 17-2011, a withdrawal is unqualified — an Early Withdrawal — whenever PERA assets are withdrawn, in full or in part, in a manner or at a time that keeps the withdrawal from being a Qualified PERA Distribution. A Qualified PERA Distribution generally requires that the contributor made qualified contributions for at least five years and has reached age 55, or that the withdrawal follows the contributor’s death.

What exactly is the 20% penalty computed against under RMC No. 91-2026? #

The 20% early withdrawal penalty is computed against the gross income earned attributable to the specific PERA assets or portion of assets that were actually withdrawn, measured from when that account or sub-account was opened up to the date of withdrawal. Gross income that remains invested, reinvested, or otherwise retained within PERA — including unrealized gains — is excluded from that base.

Does withdrawing one PERA sub-account affect my other sub-accounts? #

No, not under RMC No. 91-2026’s clarification. The 20% penalty and the recovery of the 5% tax credit attach only to the sub-account or portion of assets actually withdrawn; other sub-accounts and investment products that remain untouched inside the PERA structure are unaffected by that withdrawal.

Besides the 20% penalty, what else happens when you make an early withdrawal? #

The early withdrawal penalty also includes recovery of any 5% PERA tax credit previously availed of with respect to the withdrawn assets for the entire period those assets were held. Other taxes unrelated to PERA’s own incentives — such as percentage tax, VAT, stock transaction tax, or documentary stamp tax that may apply to the underlying investment product — continue to apply independently of the PERA-specific penalty.

Summary #

RMC No. 91-2026 narrows what counts toward the 20% PERA early withdrawal penalty: only the gross income earned on the assets actually withdrawn, measured from opening to withdrawal, with recovery of the 5% tax credit claimed on that same portion — not the entire account, not unrealized gains left invested, and not other sub-accounts a contributor didn’t touch. In the worked example above, withdrawing a ₱168,000 UITF sub-account early cost ₱11,100 in penalty (a ₱3,600 income-based charge plus ₱7,500 in recovered tax credit), while a second, untouched sub-account worth ₱112,000 was unaffected. The underlying “early withdrawal” trigger itself — missing the five-year/age-55 qualified distribution threshold — still comes from Revenue Regulations No. 17-2011 and Republic Act No. 9505; RMC No. 91-2026 only clarifies what the 20% is measured against. For the contribution-side 5% tax credit this penalty can claw back, see PERA Tax Incentives: How the 5% BIR Tax Credit Works Under RA 9505; for how the certificate evidencing that credit is now processed, see How to Claim Your PERA Tax Credit Certificate Under the New PeraSys/ePERA Process (RMC No. 94-2026). Confirm your own account’s classification and computation with your PERA administrator or the BIR before withdrawing.

Sources #

Primary source

• Revenue Regulations No. 17-2011 — implementing rules for Republic Act No. 9505 defining “Early Withdrawal,” Qualified PERA Distribution, and the 20% penalty plus 5% tax credit recovery.

Secondary sources

• Manila Bulletin — BIR: 20% PERA early withdrawal penalty applies only to earnings, not entire balance — reporting on RMC No. 91-2026’s issuance and its clarified penalty base.
• BusinessWorld Online — BIR eases early-withdrawal PERA rules — coverage of RMC No. 91-2026, including the sub-account and partial-withdrawal treatment.
• Philstar — BIR clarifies rules on early PERA withdrawals — corroborating coverage of the circular’s title, issue date, and base-amount clarification.