Did the fund provider tell you how much was taxable? It's possible that the whole fund could be a tax free lump sum.I have a DC occupational pension from previous employment (2000-2005) with a well known multinational. I had completely forgotten about this until recently. To my surprise there is currently circa €145k in the fund. As I’m over 50, the fund management company has indicated that I can retire and withdraw 100% of the fund by way of cash. They will provide the relevant information in the coming weeks. Can anyone tell me what the tax implications of doing this would be. From what I can determine 25% is tax free, but I’m unclear regarding the remaining 75%. Depending on what I read, it will be subject to either 20% tax or full marginal rate income tax (52% in my case).
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The ARF in the above case would be subject to deemed disposal of 4% per annum from the age of 60 ?It will be liable to income tax, USC and PRSI. If you are still working and in receipt of income, you will pay 52% on the remaining 75%. Unless you are in desperate need of a lump sum, I would dodge this.
The ARF is in existence 25 years and the only instances I have seen of people taking the taxed cash option was after the 2008 recession when people were cashing in pensions to keep their businesses afloat.
If you need income, set up an ARF and take the money out on a regular basis over a number of years. You will be able to control the taxation element of it and it will last you longer.
Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Would it not fall into the €200-€500k bracket (€2,000,000 x 25%), taxable at 20%?Income from the 75% will be taxed at your marginal rate
Not 20% per Revenue, given its well under the €2m threshold.Income from the 75% will be taxed at your marginal rate
Tax free lump sump is max 25% of the fund value so 25% of 140K in this case. The rest is subject to tax at the marginal rate if drawn as cash or alternatively reinvested in an ARF an drawn down over multiple years (starting latest at age of 60).Would it not fall into the €200-€500k bracket (€2,000,000 x 25%), taxable at 20%?
Not 20% per Revenue, given its well under the €2m threshold.
“You can receive a tax free lifetime limit of €200,000 on retirement lump sums from all sources. The amount between €200,001 and €500,000 is taxable at the standard rate of tax (20%). Any amount in excess of €500,000 is taxed under Pay As You Earn (PAYE) at the marginal tax rate (40%).”
“You can receive a tax free lifetime limit of €200,000 on retirement lump sums from all sources. The amount between €200,001 and €500,000 is taxable at the standard rate of tax (20%). Any amount in excess of €500,000 is taxed under Pay As You Earn (PAYE) at the marginal tax rate (40%).”
You need to tell us what the fund administrator has said your lump sum is based on before anyone can answer your questionWould it not fall into the €200-€500k bracket (€2,000,000 x 25%), taxable at 20%?
Not 20% per Revenue, given its well under the €2m threshold.
“You can receive a tax free lifetime limit of €200,000 on retirement lump sums from all sources. The amount between €200,001 and €500,000 is taxable at the standard rate of tax (20%). Any amount in excess of €500,000 is taxed under Pay As You Earn (PAYE) at the marginal tax rate (40%).”
I don’t understand. It’s a DC occupational pension (pfizer) that I stopped contributing to in 2005 and had completely forgotten about until I read an advert about unlocking a 25% tax free lump sum from old employer occupational pensions if over 50.You need to tell us what the fund administrator has said your lump sum is based on before anyone can answer your question
You can also get a lump sum calculated based on your salary and how long you worked there. It may allow you to take the whole fund as a lump sum, and if that's the case it would all be tax free.I don’t understand. It’s a DC occupational pension (pfizer) that I stopped contributing to in 2005 and had completely forgotten about until I read an advert about unlocking a 25% tax free lump sum from old employer occupational pensions if over 50.
Imputed distribution from age 61. The rule is you have to be 60 for the entire year so it's 61 for everyone except the few born on New Years day!The ARF in the above case would be subject to deemed disposal of 4% per annum from the age of 60 ?
On what basis could it be 100% tax free? If it was, I’d use it to clear my mortgage, which would free up €1,200 per month for other things, including AVCs to my current occupational pension. I’d like to increase it to 30%. If it’s taxed above 20% I’ll leave it for a few more years. The fund managers will provide the relevant information in the coming weeks, including the tax implications, but I’m impatient!Did the fund provider tell you how much was taxable? It's possible that the whole fund could be a tax free lump sum.
Five years, 19 years ago? I left age 33.You can also get a lump sum calculated based on your salary and how long you worked there. It may allow you to take the whole fund as a lump sum, and if that's the case it would all be tax free.
On what basis could it be 100% tax free?
Thank you to everyone for the info. Appreciated.I have a DC occupational pension from previous employment (2000-2005) with a well known multinational. I had completely forgotten about this until recently. To my surprise there is currently circa €145k in the fund. As I’m over 50, the fund management company has indicated that I can retire and withdraw 100% of the fund by way of cash. They will provide the relevant information in the coming weeks. Can anyone tell me what the tax implications of doing this would be. From what I can determine 25% is tax free, but I’m unclear regarding the remaining 75%. Depending on what I read, it will be subject to either 20% tax or full marginal rate income tax (52% in my case).
I left job which I have my previous pension pot with in 2017. I will be 50 in 7 years. Can I use inflation adjustment to increase my remuneration at that stage? Would this allow me to pay a little less tax on the 75% left?
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