In the scenario you outline above, the individual
still has an entitlement to potentially receive a tax free lump sum of up to €200,000 from a pension scheme, notwithstanding that they availed of €50,000 of relief (under Section 201 - see below) on this particular termination of employment.
The individual in your example has used up €50,000 of the €200,000 lifetime maximum amount (for employment terminations) and could avail of up to €150,000 tax free under Section 201 on a future termination package if the maths allowed. An employer who makes a tax free payment on the termination of an employment is required to make a return to Revenue.
Depending on how the stars align for individuals with high earnings and long service, they could potentially receive up to €200,000 on the termination of an employment tax free
plus €200,000 as a pension lump sum tax free.
As companies are offering a range of redundancy and pension transfer packages to staff and ex-employees, Diarmaid Blake offers essential advice
Exemptions and reliefs in respect of tax under section 123.
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