Hoping to retire early with a very small pension pot and looking for the most tax efficient way of drawing down the full amount, as an annuity would generate about 1-1.5K p.a.
Have a small DC Pension with AVC's expected to be worth around 60K on retirement. No previous pension.
After taking the lump sum (15K) tax free I want to take the balance (45K) as a taxable lump sum, but can't seem to get any clarity on the potential tax liability.
My understanding is that it is above the "trivial pension" limit (up to 30k at 10%) so most likely would be taxed at 20%/40%
I intend to work for a number of months in my final year so will have used most of my tax credits under PAYE - can I use any available tax credits against my taxable lump sum or do I need to? or can I expect to pay 40%? I assume I will also be liable for PRSI/USC.
If it's taxed at 40% I see my only other option is ARF where I would draw down the full pot over a short number of years (to avoid 40% and take advantage of tax credits).
Thanks in advance for any advice.
Have a small DC Pension with AVC's expected to be worth around 60K on retirement. No previous pension.
After taking the lump sum (15K) tax free I want to take the balance (45K) as a taxable lump sum, but can't seem to get any clarity on the potential tax liability.
My understanding is that it is above the "trivial pension" limit (up to 30k at 10%) so most likely would be taxed at 20%/40%
I intend to work for a number of months in my final year so will have used most of my tax credits under PAYE - can I use any available tax credits against my taxable lump sum or do I need to? or can I expect to pay 40%? I assume I will also be liable for PRSI/USC.
If it's taxed at 40% I see my only other option is ARF where I would draw down the full pot over a short number of years (to avoid 40% and take advantage of tax credits).
Thanks in advance for any advice.