ARF commencement of withdrawals

[Daddy Ireland]

I turn 60 in May. From what date must I withdraw the minimum 4% ?

 

[Daddy Ireland]

Sorry, found the answer elsewhere.

 

[dub_nerd]

What was it?

 

[Daddy Ireland]

I must be 60 for one year. So in effect 4% to be taken by 31/12/20.

 

[Gordon Gekko]

What was it?

Yes, the language in the legislation is pretty obtuse; it’s the first year in which the ARF-holder is 60 for the whole year.

So basically the year in which he or she turns 61.

That is, unless he or she was born on 1 January, in which case it’s the year he or she turns 60!

 

[Moribund]

A follow on from this. When is the 4% minimum amount calculated?

e.g. if
Jan 1st = €200,000
Dec 1st = €220,000

I would expect it to be based on the Opening amount i.e Jan 1st but can't seem to find confirmation of this

 

[Prittstick]

30th November

"The main pension changes were confirmed / clarified in the Finance Act 2012 – these were previously announced in the Budget and Finance Bill 2012. ARFs With effect from 2012 the annual imputed distribution which applies to the value of assets in an Approved Retirement Fund (ARF) is to be increased from 5% to 6% in respect of ARFs with aggregate asset values in excess of €2 million. As soon as the asset values exceed €2 million, then the increased rate of 6% applies to the total value and not just the excess amount over €2 million. The imputed distribution valuation date has been moved forward to 30th November (previously 31st December), and there are specified timings relating to the production of a Certificate confirming values to the nominated Qualifying Fund Manager (QFM) / PRSA Provider if there is more than one ARF / Vested-PRSA and the aggregate value is over €2 million."

 

[Steven Barrett]

Yes, the language in the legislation is pretty obtuse; it’s the first year in which the ARF-holder is 60 for the whole year.

So basically the year in which he or she turns 61.

That is, unless he or she was born on 1 January, in which case it’s the year he or she turns 60!

Yet to have a retiring client who was born on 1 January and get hit with this

The imputed distribution valuation date used to be 31 December but the QFMs gave out about the logistics of managing this over the Christmas period when most of the country shuts down. The Revenue were fairly lenient and allowed any date in December before it was switched to 30 November. Any ARF's set up in December aren't subject to imputed distribution in that year.

If you are taking a regular withdrawal from your ARF, the QFM will calculate the value as at 30 November. If the amount you have taken out is less than 4% at that date (if fund has grown in value since the start of original withdrawals), they will pay the balance as a lump sum.

As an aside, was explaining the retirement options to a client this afternoon. They really need to simplify them, they are far too confusing for people to understand and far too many caveats. They just don't make and sense. They can start with getting rid of the AMRF if you don't have a guaranteed pension income of €12,700 a year, you must put €63,500 into an AMRF, which you can only draw down 4% once a year (or not at all if you don't want to). You can also use that €63,500 to purchase an annuity to satisfy the rule. But €63,500 won't buy you an annuity of €12,700 a year. If you get the full State pension, that will satisfy the €12,700 rule, otherwise you have to wait until you are 75, when you can draw down as much as you want and will become an ARF and subject to imputed distribution. But the imputed distribution of 4% that we talked about is actually 5% for over 70s )


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Daddy Ireland]

Hi,
Say one continues on in employment after age 60 to age 65 and at age 60 the employee/employer pot is say 200k. One has to decide around 60 then whether to go the annuity route or ARF/AMRF route. Say decide go latter must one instruct broker to put 63.5k to AMRF and leave the remainder in an ARF and how does the continuing employer/ employee contributions get applied so that 4% can be taken out each year. I am confused how all this works where one continues on in employment. Thanks for any clarifications.
Daddy Ireland

 

[moneymakeover]

As I understand it the ARF and AMRF are only required at retirement.
Retirement can happen at any age after say 50 (once person chooses to stop working)
But if you decide to wait until say 65 then that's when the funds are transferred to ARF and AMRF.

 

[Conan]

It all happens when you decide to draw down the benefits, the lump sum and then transfer the residue (say 75%) into an ARF/AMRF. If you continue working to 65 or later you can defer drawing down until age 70 at the latest. But once you access the lump sum you must then transfer the residue to the ARF/AMRF.

 

[WhiteCoat]

Out of curiosity, if someone set up an ARF in his 50s (for example to access the lump sum part) - does this mean that he doesn't have to withdraw funds under imputed distribution until the age 60 rule kicks in?

 

[Early Riser]

Out of curiosity, if someone set up an ARF in his 50s (for example to access the lump sum part) - does this mean that he doesn't have to withdraw funds under imputed distribution until the age 60 rule kicks in?

Yes.

 

[Daddy Ireland]

Thanks very much to all. That's very clear to me now.