Advice on AVC

T

tim1

Guest
i'm due to get retirement of 40,000euro and plan on starting work with a new employer in August. My understanding is that i dont have to pay tax on 20,000 (ie 10,000 + an extra 10,000 as i never received a previous lump sum) i plan to put in a lump sum €20,000 in an avc to avail of the tax break without making any additional payments. will the tax be automatically taken out by the time i receive my actual payment. and if i then open an avc, can this tax be claimed back. how do i apply for the rebate. How do i go about setting up an avc...any advice
 
Do you mean a redundancy payment of 40k Tim?

I take it that you want to set-up an AVC of 20k in advance of receiving this redundancy payment?

Note that your max pension contribution is determined by your pensionable salary...do you have scope based on your age and salary to pay a 20k AVC?
 
Its call a voluntary early retirement, as I'm 43. I'd planned on putting approx 15kto 20k into an avc and then seeking a tax rebated. When i ceased employment my salary year to date was 29k. The weekly salary with my employer will be 444pw.....i will not be receiving a pensionable salary.
 
29k is your pensionable salary so.

The max contribution you can make for 2007 is 25% of 29K which is approx €7,250 but you must reduce for any other pension contributions you have already made in 2007.

You may also make an AVC in respect of 2006 at this stage - it would be 25% of your pensionable earnings in 2006 less any contributions made in 2006.

I would very much doubt it is early retirement - the earliest age that Revenue will usually permit retirement (except in unusual health or other circumstances) is at age 50.
 
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