Tax Free Lump Sum on retirement limit question

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Moribund

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Is the revenue maximum Tax free lump sum on retirement €200k or is it the lower of €200k and 1.5 x Final Salary

e.g. Where a person is on a DB scheme and has AVCs also
Salary €60 k,
Tax Free Lump Sum from Company scheme = €90k (1.5 x Salary)
AVC fund €800,000

On retirement could the person take 110k from their AVC fund tax free on top of the €90k from DB scheme lump sum to bring up to the €200k limit or is the limit restricted to 90k (1.5 x salary)?
 
I think it is 1.5 X final salary Or 25 % of pension pot =200K , once you are 20 years in a pension scheme
You can take more than the 200K and pay 20% tax on it at the same time as taking the lump sum ,Can come in very handy for tax planning,
 
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The maximum tax free lump sum is €200k, regardless of which option you choose. In the case above, it would be worth looking in more detail at the DB benefits. Using the AVC fund to pay for the Lump Sum may allow for a larger DB annual pension income (i.e. some of the annual pension income is commuted to pay the 1.5* Lump Sum from the company scheme). After that, the remaining AVC Fund can be transferred to an ARF.
 
Thanks folks.

From Revenue perspective is it allowed to use both to make up the 200k. e.g. If in above example the AVC Pot was 600k (so that 25% of that is less than the 200k limit) could both DB scheme lump AND AVC amount be used.
 
To be clear:
- the Revenue maximum retirement lump sum from a DB scheme is 150% of Final Salary (which can include fluctuating earnings) subject to having at least 20 years service by retirement
- if the above figure were to exceed €200k, then the first €200k is tax free and any excess up to €500k is taxable at 20%
- if you have an AVC fund in addition to the DB benefits, the AVC is deemed as part of the main scheme. So it is NOT the case that you can take a lump sum of 150% + 25% of the AVC fund. The overall lump sum is limited to 150% of Final Salary (so €90k as quoted originally).
- if you take the €90k from the AVC pot, then the DB Pension will not be reduced. Any excess from the AVC pot can then be invested into an ARF (from which a minimum of 4% pa must be drawn down as income and potentially taxed) OR the residual AVC pot can be drawn down entirely, but will be taxed as income in that year.
 
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