Annual gross income from employment or profession:€70k
Annual gross income of spouse:€6k
Is it joint cover? If seems you are the main income earner and if your wife is not earning much I'm not sure her death needs to be insured very much if at all if there is money in the company to cover the mortgage when it falls due in 8 years.Life insurance: yes, full cover for mortgage amount costing €4300 annually
I'm not sure why you can't just pay yourself more from the company. If there is €300k in the company already and you are generating a surplus of €20k-ish a year then there is a buffer from to pay yourself a bit more in the meantime, no?n the red every month for day to day living and bills, can’t see any way out of this.
It makes no sense to have €12k in a savings certificate and to be paying interest on a personal loan of €20k. Liquidate the savings certs and pay off the loan and you'll save a lot on interest.Other savings and investments: only €12,000 in a savings certificate hoping to keep towards college fund for kids. Trying to save €300/month to add to this.
Currently have €300,000 sitting in company account, when mortgage is due hoping to avail of retirement relief to use this money to clear the mortgage. should have in excess of €450,000 in company in 8 years. We don’t want to use tax free lump sums from pension to try to clear the mortgage.
mortgage of €370k interest only
Life insurance: yes, full cover for mortgage amount costing €4300 annually
It makes no sense to have €12k in a savings certificate and to be paying interest on a personal loan of €20k. Liquidate the savings certs and pay off the loan and you'll save a lot on interest.
Currently have €300,000 sitting in company account, when mortgage is due hoping to avail of retirement relief to use this money to clear the mortgage.
Age:53
The plan is to avail of the early retirement relief but continue to work as an employee of the company with the maximum shares transferred to my wife a couple of years before.
this was given to us by our accountant,
Thanks again, we must definitely look at the insurance cost , policy was taken out at the same time as the mortgage but did have some loading at the time. Also included in this is serious illness cover.
OP, I really would double-check this element if I were you. We have a similar plan in place, and our accountant was very clear that the company needs to be officially wound-up and liquidated in order to avail of retirement relief.The plan is to avail of the early retirement relief but continue to work as an employee of the company with the maximum shares transferred to my wife a couple of years before.
The logic of retirement relief is for someone to sell up their business to retire and what you are proposing here looks pretty artificial. It could be perhaps within the letter of the law but not the spirit. I would get advice from more than one professional on this. And as @Brendan Burgess says - the rules could in any case change.The plan is to avail of the early retirement relief but continue to work as an employee of the company with the maximum shares transferred to my wife a couple of years before.
Irrespective of funding retirement you need to focus on the most tax-efficient way of taking €370k out of your company over the next seven years to pay off the lump sum. If retirement relief is not feasible you may need to draw heavily on a tax-free lump sum from a pension fund.Currently paying €20k into private pension, would it be a better option to increase the amount to be more tax efficient instead of drawing money out of the company and paying higher tax to clear the mortgage
Excess Cash (ie any monetary sum over and above basic working capital requirements - the Revenue define this narrowly) sitting in a company bank account or other investment is not a qualifying asset for the purposes of Retirement Relief.
In a nutshell, yes, Brendan.So Tommy
This kills the above plan stone dead?
There may be another plan which allows him to extricate the cash, but not Retirement Relief.
Brendan
Why would company cash not qualify as an asset though?Excess Cash (ie any monetary sum over and above basic working capital requirements - the Revenue define this narrowly) sitting in a company bank account or other investment is not a qualifying asset for the purposes of Retirement Relief.
Otherwise, most of the "advice" given above about Retirement Relief is simply wrong. It is available once one reaches 55 subject to terms and conditions, but there is no requirement that the claimant stops working or stops receiving a salary. The OP needs to be engaging decent professional advice on an ongoing basis if they're planning to utilise RR as a key part of their future plans.
You'll have to ask Revenue that. I wrote neither the legislation nor their interpretation of it.Why would company cash not qualify as an asset though?
Presumably because everyone would hoard cash over and above the necessary rather than pay tax on it as salary.Why would company cash not qualify as an asset though?
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