My mother (married) who will retire in November (nurse) has paid about 15% of gross salary into a pension (including an AVC) for the past number of years.
As a last minute tax break, she was thinking about topping up her AVC to use her maximum allowable tax deductable pension contribution for 2009 and 2010
Let's say she can put 20'000 lump sum into the AVC now. She will get full income tax relief on all of this.
She can claim back tax at the 20% rate (or is it 21%) on all of this......and PRSI. Lets say the combined salary of my parents is 81'000.
Correct me if I'm wrong, as a ballpark she might get a refund of say 5'000 from revenue...
The 20'000 would go into an AVC, and then an ARF.......
The guys at Zurich take a 5% of the money they receive into the AVC (sounds a lot but it's true). And they take again another 3% to set up an ARF. That's about 1600 fees (the 20'000 becomes 18'400)
My mother can take out the 18'400 from the ARF next year (without paying any tax on it, because her income will be small)
Sounds like a good bet, doesn't it ?
Or are my maths wrong ?
She has been advised by an accountant not to go ahead (on the grounds that the fees are too high, and it's too complicated, and too risky !!
I know nothing about AVCs and ARFs apart from what I read on the internet last night (mostly on AAM) over the course of about 2 hours ! but I think my mother should put the 20'000 in the AVC and set up an ARF......
Am I right ?
As a last minute tax break, she was thinking about topping up her AVC to use her maximum allowable tax deductable pension contribution for 2009 and 2010
Let's say she can put 20'000 lump sum into the AVC now. She will get full income tax relief on all of this.
She can claim back tax at the 20% rate (or is it 21%) on all of this......and PRSI. Lets say the combined salary of my parents is 81'000.
Correct me if I'm wrong, as a ballpark she might get a refund of say 5'000 from revenue...
The 20'000 would go into an AVC, and then an ARF.......
The guys at Zurich take a 5% of the money they receive into the AVC (sounds a lot but it's true). And they take again another 3% to set up an ARF. That's about 1600 fees (the 20'000 becomes 18'400)
My mother can take out the 18'400 from the ARF next year (without paying any tax on it, because her income will be small)
Sounds like a good bet, doesn't it ?
Or are my maths wrong ?
She has been advised by an accountant not to go ahead (on the grounds that the fees are too high, and it's too complicated, and too risky !!
I know nothing about AVCs and ARFs apart from what I read on the internet last night (mostly on AAM) over the course of about 2 hours ! but I think my mother should put the 20'000 in the AVC and set up an ARF......
Am I right ?