You are required to take a 4% drawdown in the calendar year you turn age 61. If you do not opt to take the drawdown, most ARF providers will make the drawdown on your behalf in either Nov or Dec on that year. They will deduct tax at source, pay you the net amount and will account for such tax with Revenue
You are required to take a 4% drawdown in the calendar year you turn age 61. If you do not opt to take the drawdown, most ARF providers will make the drawdown on your behalf in either Nov or Dec on that year. They will deduct tax at source, pay you the net amount and will account for such tax with Revenue
Correct.Thanks Conan. As I thought. No advantage /disadvantage either time of the year you take it. I presume if you have a shortfall in what you take early in the year , your ARF provider will calculate the difference and pay out the difference minus tax in Nov/ Dec and that's all part of your 2023 tax year activity and returns. Thanks again.
Marginal rate tax (unless you give them your tax credits). Any overdeduction you can claim back in your tax returns.When you say @Conan
"They will deduct tax at source, pay you the net amount and will account for such tax with Revenue"
What tax rate will they use?
Lower tax rate?
How so?If your goal is to reduce your tax on ARF income you will pay less tax if you take out withdrawals earlier in the year. In effect you reduce the mandatory rate of withdrawal by a small amount. This assumes that the fund doesn't collapse in value by the 30th of November.
If your goal is to reduce your tax on ARF income you will pay less tax if you take out withdrawals earlier in the year. In effect you reduce the mandatory rate of withdrawal by a small amount. This assumes that the fund doesn't collapse in value by the 30th of November.
I still don’t get your point.by taking out funds before the relevant date your total ARF assets are less for the calculation at the 30/11. As a result of this the specified amount is lower and thus your tax is lower.
I still don’t get your point.
It’s lower in November because you simply took it out earlier which made it higher earlier in the year.
The net position is the same.
If my ARF’s worth €1m and I’m 62, I have to take out €40k.
What’s the difference tax-wise if I take €40k in November or €20k in January and €20k in November?
Sorry but I'm still not getting this at all??by taking out funds before the relevant date your total ARF assets are less for the calculation at the 30/11. As a result of this the specified amount is lower and thus your tax is lower.
Oisin is correct. The liability is calculated as the value as at 30 November each year by the withdrawal % less any amounts already deducted that year. If there is still a liability after the withdrawals have been taken into account, a once off payment for the difference is made.Sorry but I'm still not getting this at all??
The only reason I see why you're paying less tax is because you're withdrawing less from the fund €38.8k as a opposed to €40k
and the only advantage to this if it could be called an advantage is to reduce the amount of the 4% withdrawal that you have to take??
I don't know this but do revenue not take into account all withdrawals in the year prior to 30th November as well as fund value on that date
or do they just look at the fund value on that date as the withdrawal is taxed (so to speak) separately ??
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