Pension for sole trader

[outofmymind]

A friend is a sole trader and has a PRSA that he has been paying into. He is 62 and wants to convert to an ARF, take his 25% tax free lump sum and start drawing from the pension, but he also wants to keep working. Can he do this? Or does he have to formally end trading e.g. by informing Revenue? and if he formally ends trading can he then register to start trading in a similar or the same area of work? Obviously he would pay tax etc on the pension and earnings. He's not trying to pull a fast one but needs to increase income for a few years.

 

[GSheehy]

Yes, he can do that and doesn't have to alter anything with trading/Revenue.

Could split PRSA into more than one policy is he only needed some additional income and tax free cash. Can also continue to pay into a pension to 75 if he so wishes.

Gerard Sheehy.

www.prsa.ie

 

[kevhenry]

He is entitled to take benefits from a PRSA at age 60 regardless of whether he keeps working or not.

The only time one needs to formally end trading in the scenario you mention is when claiming from a company pension scheme (rather than a PRSA) between the ages of 50 & 59.

He can also take his 25% from the PRSA and leave the remaining 75% in it instead of transferring to an ARF. Once tax free cash is taken it becomes a ‘vested’ PRSA.

Kevin
www.thepensionstore.ie

 

[Slim]

He is entitled to take benefits from a PRSA at age 60 regardless of whether he keeps working or not.

The only time one needs to formally end trading in the scenario you mention is when claiming from a company pension scheme (rather than a PRSA) between the ages of 50 & 59.

He can also take his 25% from the PRSA and leave the remaining 75% in it instead of transferring to an ARF. Once tax free cash is taken it becomes a ‘vested’ PRSA.

Kevin
www.thepensionstore.ie

I have a PRSA and will shortly start signing for credits.. I was going to leave the PRSA intact as an investment but are you saying I can take 25% and leave the rest in the PRSA and not be taxed on deemed drawdown of 4% pa?

 

[ClubMan]

I have a PRSA and will shortly start signing for credits.. I was going to leave the PRSA intact as an investment but are you saying I can take 25% and leave the rest in the PRSA and not be taxed on deemed drawdown of 4% pa?

What age are you?
As far as I recall the 4% is only mandatory from the year in which you turn 61.
You could vest the PRSA, take 25% tax free (subject to the usual cap of €200K cumulatively on tax free lump sums) and leave the 75% in place without touching it if you are under 61.

 

[Slim]

Ah, I'm approaching 64. I take it that taking the 25% would activate the deemed drawdown? Would I have to create the ARF at that stage?