# SSIA --> PRSA for 73 year old.  What happens at age 75?



## stuffit (20 May 2007)

My mother (age 73 next birthday) has obtained the proceeds from her SSIA.
She's eligible to invest €7500 of this in a PRSA and obtain the Government contribution of €2500.

My question is what happens when she turns 75. 

How can she encash the PRSA in a tax tree manner?

25% of the PRSA's value can be taken as a tax-free lump sum.

What tax would be payable on the remaining 75%?
Is there any way to reduce the tax due?

[ My mother is current receiving the non-Contributory state pension. Circa €170 per week.
My father has the Contributory state pension and a small pension from his old job. ]




Thanks

Ste


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## ClubMan (20 May 2007)

As far as I know she can avail of the _SSIA _to pension (not just _PRSA_) transfer incentive scheme and then (since she is already past retirement age) at year later or whenever she chooses (?) she can take 25% as a tax free lump sum and then she will most likely (unless she has other pension savings) have to buy an annuity (annual income) with the remaining 75% and this income would be assessable along with any other income for income tax.


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## Geri Atrick (20 May 2007)

ClubMan said:


> As far as I know she can avail of the _SSIA _to pension (not just _PRSA_) transfer incentive scheme and then (since she is already past retirement age) at year later or whenever she chooses (?) she can take 25% as a tax free lump sum and then she will most likely (unless she has other pension savings) have to buy an annuity (annual income) with the remaining 75% and this income would be assessable along with any other income for income tax.




When she takes the 25% lump sum she could transfer the balance into an ARF or AMRF and draw down funds as required. If her current income is under the tax free exemption limit she could arrange th withdrawls to avail of her remaining tax exemption - but not exceed it otherwise she would be charged at marginal rate on the excess.


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## ClubMan (21 May 2007)

Geri Atrick said:


> When she takes the 25% lump sum she could transfer the balance into an ARF or AMRF and draw down funds as required.


I didn't think that an _AR[M]F _would be an option if the _SSIA _transfer of up to €7,500 (+ €2,500 incentive topup) represented most or all of the individual's pension savings due to the limits applicable to these being an option?


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## LDFerguson (21 May 2007)

Once an individual reaches age 75, their fund can be transferred to an ARF without restriction (or AMRF rules applying).


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## ClubMan (21 May 2007)

OK - thanks. My mistake.


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## Geri Atrick (24 May 2007)

ClubMan said:


> OK - thanks. My mistake.



I am arranging my SSIA _- PRSA transfer through Eagle Star . I had  intended leaving it as a PRSA indefinetly with Brian Cowan proposing to tax ARFs from this year. However ,the young lady dealing with me said that when I take the 25% tax free lump sum , I will be required to convert the balance to an ARF but this will not involve any additional costs.  I contacted Eagle Star through AAM and Labrokers @ 0 fee and 1% a.m. charge. The choice of funds for standard PRSAs is more than adequate for my purposes.


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## ClubMan (24 May 2007)

Maybe this is correct but be careful of taking at face value advice from a sales person with a vested interest in selling you something. Such advice may not be independent, comprehensive or accurate.


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## Geri Atrick (25 May 2007)

ClubMan said:


> Maybe this is correct but be careful of taking at face value advice from a sales person with a vested interest in selling you something. Such advice may not be independent, comprehensive or accurate.



I will keep your warning in mind. In this instance I am happy enough to go ahead as I can not see any problem in having the monies in an ARF as opposed to a PRSA and there probably is some regulation to this effect. It was Eagle Star HQ that gave me this info not a local rep!
I am a bit  touchy about the costs of ARFs - when I retired I had a modest AVc which I had taken out through a broker . I was contacted by the broker who told me of the various options available . I choose the ARF route for which I was charged 2% upfront and a trailing charge of 0.5% pa. This is a cause of an irrational level of irritation to me as I have had no further contact from the broker and their initial advice re funds was  not great. By comparison, Eagle Star doing the PRSA/ ARF conversion for free can' t be  bad


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## LDFerguson (25 May 2007)

At age 75, your mother can also withdraw the 25% tax-free cash and then withdraw the remaining 75% in one lump sum, bypassing the ARF altogether, if the 75% doesn't bring them over the Income Tax Exemption Threshold in that year.


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## stuffit (19 Jun 2007)

Thanks for all the info.

Now does anyone know if any pension provider is willing to start up a PRSA for someone who will more than likely encash it within 2 years?


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## LDFerguson (19 Jun 2007)

If your mother is still 73 next birthday as per the original post, I know Eagle Star will take a PRSA application with a retirement age of 75.  There are probably others out there but I just mention Eagle Star because I recently arranged a PRSA for someone with just over 2 years to retirement age with them, so they're in my head.   

Liam D. Ferguson
www.ferga.com


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## stuffit (20 Jun 2007)

No.  She's turned 73 now.


Stephen


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