Backdated pension contributions

[stuffit]

I set up a PRSA last August. I pay into it every month through the payroll at work.
I would like to make a one-off payment.
So that for 2005 I would have contributed a total of 20% of my 2005 salary.

What is the best way to do this?

I could write a cheque for a lump sum and send it to my pension provider.
I would then need to apply for PAYE and PRSI refunds for 2005.
This means making two separate tax refund applications.
Revenue will take 4-6 months to give me the refunds.


Instead can I get work to use the payroll system to pay the amount (over a couple of months) from my gross salary? This would mean that I’d get tax relief straight away and wouldn’t have to wait for a refund.
However it would mean that I’d breach the 20% threshold for pension contribution for 2006.

Does this have any implications? What action is employer obliged to take when 20% is exceeded.


Ste

 

[Pexus1976]

Hi St,

Instead can I get work to use the payroll system to pay the amount (over a couple of months) from my gross salary?

Probably! But it will mean increasing your regular monthly contribution. Best to seek advice from your company pension officer.

Does this have any implications? What action is employer obliged to take when 20% is exceeded.

If an individual contributes more then the relevant limit in the tax year, he or she can carry forward the unused relief to future tax years and possibly have it offset then.

 

[asdfg]

Afaia, the payroll system only allows you to make contributions in the current tax year. You have to contact revenue and tell them that you have made contributions and want to offset it against 2005 income. They may ask for proof of this. They will then eventually issue you with a balancing statement for 2005. My understanding is that revenue forward the details to welfare in order to get relief on PRSI.