AVCs - is it better not to maximise tax-free lump sum?

Hi there,
I am new to AVCs and as I'm a teacher in my late forties I know I have limited scope to make contributions. I estimate that when I retire I will have about €50,000 in my AVC (I'm looking to retire in about 10 years when I am 57/58). My understanding is that if I withdraw €5000 a year from that point onwards from an ARF it will count as an S Class contribution towards my state pension. If I were to maximise my tax free lump sum then I wouldn't have the scope to continue to make drawdowns of 5k each year from an ARF. Does this sound like a good plan?

Tbh, perhaps I have the whole thing wrong about S Class contributions anyway....I will have some rental income at that time and I plan to do some marking of Junior/Leaving Cert scripts each year so perhaps I will automatically be moved into Class K?

Thank you so much for taking the time to read my query. Thank you for any advice you provide me with - I know there is a wonderful level of expertise on this site.

Derek1001 said:

Tbh, perhaps I have the whole thing wrong about S Class contributions anyway....I will have some rental income at that time and I plan to do some marking of Junior/Leaving Cert scripts each year so perhaps I will automatically be moved into Class K?

Click to expand...

Will you be self employed when you are marking the papers ?
Rental or investment income will not convert to class K if you have even the smallest amount of earned self employment in that year.

If you earned 100 euro from self employment paper marking, your unearned income if over 4900 euro will remain at class S.

Also if you have rental income and an ARF, and the combined total of both of these are in excess of 5k per year, you will gain 52 class S for that year.

For example if you had rental income of 4k and ARF drawdowns of 1k you will get 52 class S for that year.

Check out this thread.

Thank you S Class for such a detailed and helpful response. That is a good question that you pose about what my employment status would be if I'm marking exams post retirement - my assumption is that I would be 'self-employed' but I'm not sure. I will make contact with the Exams Commission and ask them that question.