Setting up an ARF - Logistics?

[redstar]

I currently have 2 x PRBs and a PRSA (ongoing, non-AVC type) with Irish Life

When the time comes, if I were to go execution-only, how would I access the 2 x PRBs and a PRSA and transfer them to an ARF with a different provider?
Would the execution-only adviser handle that as part of setting up the ARF ?

 

[redstar]

I've just asked Ir Life about taking my pension benefits before the stated retirement age (68).
I am in a Standard Group PRSA through my employer.

Reply
"If you resign from ... before reaching your retirement age, you would be able to claim your funds from your resignation, as you are over the age limit. There are no fees or exit charges for claiming your funds, but we would like to note that some of your PRSA will be subject to taxation."

I'm a bit confused here. I will use the PRSA to take out a ARF after the 25% TFLS. Where would taxation come into it ? The fund is not exactly huge (160k)

 

[ClubMan]

I'm a bit confused here. I will use the PRSA to take out a ARF after the 25% TFLS. Where would taxation come into it ?

Any income you draw from your ARF will be assessable for income tax (and USC and maybe PRSI).
Depending on how much you take and what your tax credits are at the time you may or may not pay tax.

 

[redstar]

I understand that an ARF is subject to tax but the Ir Life advisor said "some of your PRSA will be subject to taxation"
Maybe she assumed if taken as cash..

 

[GSheehy]

Would the execution-only adviser handle that as part of setting up the ARF ?

Yes.

 

[ClubMan]

I understand that an ARF is subject to tax but the Ir Life advisor said "some of your PRSA will be subject to taxation"
Maybe she assumed if taken as cash..

Could be just sloppy wording. Maybe ask them to clarify what exactly they mean?

 

[S class]

Apart from the 5 years of pension theft, there is no tax on a PRSA.

 

[ClubMan]

Apart from the 5 years of pension theft

Do you mean the erstwhile pension levy?

there is no tax on a PRSA.

Not strictly correct - income drawn from a vested PRSA is assessable for income tax as normal.

 

[redstar]

Could be just sloppy wording. Maybe ask them to clarify what exactly they mean?

I think you are right. Its a bit sloppy - they seem to assume that the PRSA will be used to buy an annuity with them (or taken as cash).
Its early days yet - I hope to 'retire' in about 2-3 years so just want to get a handle on the logistics of what happens when the time comes to buy pension(s) - and likely not with Irish Life.

 

[Redzer]

If you're not currently maxing out your Contribution/AVC with your current employment and some of the PRBs/PRSA are from previous employments then you can possibly 'retire' the PRBs/PRSA now (or individually in a staggered way if preferable) into an ARF if you're over 50. This essentially just moves them from the Irish Life Pension Funds to the new ARF pension fund. This will release the associated Tax Free Lump Sums for those PRBs/PRSA. You can then use those lump funds to top up your AVC to the Age Limits. As these will probably be outside of the payroll route then you'll also get tax back on the top up values = free money. You will be subject to 4% Deemed Distribution on the ARF from the year of your 61st birthday and that will be subject to Income Tax but its still beneficial.