What to do with money in limited company

C

Catwoman

Registered User
Messages
12
What would people suggest to do with over €800k in bank from a limited company? My husband has let the money build up in his business account making no interest whatsoever. He is 50 and possibly planning on closing the business at 55. Thank you in advance
 
@GSheehy he has a pension, putting away €10'000 per year this last 3 years. He is thinking of winding up the business at 55 because job is very physical & taking its toll. I just think there has to be a better way than that much money sitting in one bank!! It's just knowing where is the right place to put it in the meantime...
 
You don't want to take it out of the company now? You just want to 'put' it somewhere, as company money, for 5 years?

Or, do you want tax efficient ideas on how to take it out of the company for his personal benefit? If so, - Date of entry to service (when did he(and you) start the company), gross earnings per annum, value of all pensions.

Same for you if you're also a director.
 
Aph2016 said:
Why wouldn't he just pump it into an executive pension?
Click to expand...

Because it will be taxed when he takes it out.

And it might be possible to avail of some other relief e.g. Retirement Relief where it would be taxed at a lower rate.

That is why he needs to pay for good professional advice.
 
This might be a good place to put this post as Pension should be one of the considerations on the OPs query and, in fairness, the quandry of having cash cow companies has come up a few times lately.

It might also help those who are lamenting the 'unlimited' contribution to PRSAs, down to only 100% of salary.

Let's assume that Mr. Catwoman is in business for a while and that he has 15/20 years service in his own company. We'll also assume that his salary is €50,000 and that he hasn't focussed on pension at all and that his current fund value is just that €30,000.

A Master Trust Executive Pension (Maximum Funding Quote) would generate something like the figures below. It's just an indication of the scope that Company Directors still have for pension funding.

If Mr. Catwoman wanted to fund for tax-free cash only i.e. 1.5 X Salary , he could do that.

If Mrs. Catwoman had a salary and the service to go with it she could do something similar.

If you are looking to max fund your pension as a company director, you may have to switcch between products based on current rules but you may also have both PRSA and MT products on the go at the same time.

1. Future Ordinary Contributions​

These figures are the maximum ongoing contributions that can be made up until retirement, assuming no special contribution is paid.
Ordinary Contribution per month:
€17,213
for 61 months
... or
Ordinary Contribution per annum:
€175,000
for 6 years

2. Special Contribution for Past Service​

These figures show the maximum special contribution that can be made now, allowing for service worked to date. In addition it shows the maximum ongoing contributions that can be made.
Maximum Special Contribution:
€776,639
lump sum
Plus reduced Ordinary Contribution per month:
€4,481
for 61 months
... or
Reduced Ordinary Contribution per annum:
€45,560
for 6 years

3. Matching Ordinary & Special Contributions​

These figures show how much can be invested on a one-off basis, where there is a corresponding matching contribution on an ongoing basis.
Special Contribution:
€150,000
lump sum
Ordinary Contribution per annum:
€150,000
for 6 years

4. Special Lump Sum Contribution​

These figures show how much can be invested on an ongoing basis, allowing for a special contribution now of €0.
Ordinary Contribution per month:
€17,213
for 61 months
... or
Ordinary Contribution per annum:
€175,000
for 6 years


Gerard

www.prsa.ie
 
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