Avc overpayment question

[005404]

Hi guys.

Financial decision I face.
Private sector 42 yo, 61k Salary DB
Avc 7200. Pension 3k
Own business t/over 2019 8k
Avc pot 154k old job ceased fund 8k

Married wife 57k pension 3k 39 years
Public sector
Rental property income 20800
Priminary tax for 19, 7k

Morgage primary 197 overpayment 10% already used this year.

Question to reduce tax bill for 2019 use unused allowances for myself and wife to earn 40% rebate.

Dilema is am I overpaying on my avcs, by rules of company additional to pension in my case.

Any advice much appreciated and valued thanks in advance

 

[LDFerguson]

Sorry - I'm finding it a bit difficult to understand your post.

"61k Salary DB" You are in private sector employment, earning a salary of €61,000 and in a Defined Benefit pension scheme?

"Avc 7200. Pension 3k" You are paying €7,200 per year in AVCs. What does "Pension 3k" mean?

"Own business t/over 2019 8k " You have a separate business with a turnover of €8,000 per year. Is this a limited company? What salary are you declaring from this business?

"Avc pot 154k old job ceased fund 8k" The value of your AVC fund is currently €154,000. You also have a pension fund of €8,000 from a previous employment.

"Married wife 57k pension 3k 39 years
Public sector"

Does "pension 3k" mean that your wife is making a personal contribution of €3,000 per year to her public service superannuation scheme?

 

[005404]

Sorry - I'm finding it a bit difficult to understand your post.

"61k Salary DB" You are in private sector employment, earning a salary of €61,000 and in a Defined Benefit pension scheme?

"Avc 7200. Pension 3k" You are paying €7,200 per year in AVCs. What does "Pension 3k" mean?

"Own business t/over 2019 8k " You have a separate business with a turnover of €8,000 per year. Is this a limited company? What salary are you declaring from this business?

"Avc pot 154k old job ceased fund 8k" The value of your AVC fund is currently €154,000. You also have a pension fund of €8,000 from a previous employment.

"Married wife 57k pension 3k 39 years
Public sector"

Does "pension 3k" mean that your wife is making a personal contribution of €3,000 per year to her public service superannuation scheme?

Hi Liam

Thanks for reply

2019 year
61k Salary observation correct.

Pension 3k for standard pension in my company DB private sector, additional company avc 7200 also paid annually.

Sole trader 8k profit after expenses taken from turnover. No salary

Avc 154k old job pension 8k, your analysis is correct.

My wife paying 3k into her pension via payroll. Public sector.

7k preliminary tax paid as lready for 2019.

My aim is to make payment to max avc allowance by revenue guidelines. Circa 6k myself and 8.5k for my wife.

My concern is overpaying AVC's. My wife avc pot stands currently 4k.

The overpayments added to my preliminary payment will reduce my tax bill for 2019. Also my preliminary payment for 2020.

Im finalising my plan to have accounts ready for October and appreciate any comment or help.

 

[LDFerguson]

Your maximum AVC limit is 25% of your 2019 income, less whatever personal contributions and AVCs you already paid. Your wife's limit is 20%. In order to check that you're not risking overfunding by making these AVCs, you'd need to look at the estimated benefits from the AVCs at retirement plus the estimated benefits from the main DB scheme. You also need to check if your total income in retirement is likely to be taxed at the higher rate, in which case the argument for AVCs is weakened. The financial broker who advises you on the AVCs should be able to run those checks for you before you commit to doing it.

If you've income as a sole trader of €8,000 after all allowable expenses, then you could put in €2,000 from that into a Personal Pension or PRSA.

Rental income is not pensionable.

 

[005404]

Your maximum AVC limit is 25% of your 2019 income, less whatever personal contributions and AVCs you already paid. Your wife's limit is 20%. In order to check that you're not risking overfunding by making these AVCs, you'd need to look at the estimated benefits from the AVCs at retirement plus the estimated benefits from the main DB scheme. You also need to check if your total income in retirement is likely to be taxed at the higher rate, in which case the argument for AVCs is weakened. The financial broker who advises you on the AVCs should be able to run those checks for you before you commit to doing it.

If you've income as a sole trader of €8,000 after all allowable expenses, then you could put in €2,000 from that into a Personal Pension or PRSA.

Rental income is not pensionable.

Thanks for reply

My query is though that by maxing out personal allowances for myself and wife. This will negate the tax bill due on rental property for 2019 and the preliminary bill for 2020. Also adding the preliminary payment already made for 19. This will offset the cash investment for AVC's now.

My issue then arises about restrictions to my AVC total allowance.