Not permitted to take taxable lump sum if over 30k??

M

Mothergoose

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Informed yesterday that I could not take taxable lump sum if the sum after taking the 25% tax free is over 30k. Initially, I was informed that I could take all of the sum, i.e. the 25% tax free, with the remainder taxed at the marginal rate. The taxable amount after the 25% is 30,225. I've only been in the employment 4.5 years. I'm taking early retirement. Don't want to leave it there as it is will only be worth about 900 a year when I retire in 9 years. I have had a lot of issues dealing with them - see other post - as have some colleagues - apparently one colleague is waiting 5 months post retirement to get her pension from the provider.
 
Apologies, I might have been unclear - is it a normal rule of pension that you cannot draw down the whole amount if over 30k - that is, including the 25% and the taxable remainder.
 
Mothergoose said:
Apologies, I might have been unclear - is it a normal rule of pension that you cannot draw down the whole amount if over 30k - that is, including the 25% and the taxable remainder.
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Yes, absolutely normal.
You can only fully commute a 'trivial' pension, which is c. 20k limit.
 
Hi! Red Onion, I will have a 3k per annum HSE pension when I reach 65 - does this make a difference? They mentioned retained benefits on the form- is that a retained benefit?
 
Mothergoose said:
does this make a difference?
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Yes and no.

There are 2 different calculations for trivial pension. It seems you can't take the full amount under either calculation.

The first is if total pensions, from all employments, after taking tax free sum is less than 30k.

Then the 2nd is if the pension from this specific employment is less than 330 per year.
 
Thanks, Red Onion. Do you know how much I can expect to be able to draw down tax free? Am I understanding it correctly that the tax free lump sum will be less because I will have a lump sum - 10k coming from HSE when I am 65? Can I draw down the rest of the fund and pay tax at my marginal rate on it, or do I have to put some of it in to an ARF, and then I can withdraw the full amount of the fund?
 
Is the pension you are talking about relating to earnings from an employment other than HSE ? If it's a different employment them it doesn't matter what tax free lump sum you get from HSA. You would be entitled to 25% tax free from the other pension.
 
Thanks SClass. The form asks me if I have retained benefits, and then says if I have my 25% tax free may be reduced, and I then also may not be able to take the the remainder of the fund which would be taxable. Yes, the HSE pension, which I cannot claim until I am 65 - is different to the one I am claiming now. The HSE pension is only 3k per year and 10k lump sum when I am 65. I have no other pensions, but will have two almost full State pensions - one from UK - and one from Ireland.
 
If the pension you are now claiming from is a defined contributions scheme or PRSA and you are not going to get an extra tax free payment in the future from it, you will be entitled to the full 25 % tax free. The tax free amount would only be reduced if you were exceeding the maximum lifetime tax free limit of 200000 euro, which you are not.

Answer no to the retained benefits question.
 
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The trivial 30k rule is irrelevant now since the AMRF was abolished. On the assumption that this pension is from a different employment than the HSE one, you can take the 25% lump sum and then draw down the balance as income. Since it looks like you are stopping working it maybe better to draw down this balance over 2 tax years to get it all tax free.

lump sums are tax free up to 200k
 
Thanks Oisin19 and SClass. So, I can draw down the whole amount, the tax free 25% and the remainder taxable? What is AMRF in case there is an issue with being 225.00 over the 30k?
 
Yes.

An AMRF (approved minimum retirement fund) was a fund you had to invest a minimum of 63,000 euro into before you could take funds from a PRSA.
 
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