Maximising Tax Free lump sum

donalfff

Registered User
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I intend retiring later in 2015 on a salary of €100k after 25 years in a defined benefit scheme. I have significant AVC funds to ensure I get the max tax free lump sum of €150,000.

Question: in previous tax years, I earned in excess of €100,000 and wonder are there other Revenue rules which would allow me to use the higher salary in previous years to bump up my tax free lump sum? I've heard average of last 3 years?; highest in last 5 years? highest in last 10 years?

thanks
 
I intend retiring later in 2015 on a salary of €100k after 25 years in a defined benefit scheme. I have significant AVC funds to ensure I get the max tax free lump sum of €150,000.

Question: in previous tax years, I earned in excess of €100,000 and wonder are there other Revenue rules which would allow me to use the higher salary in previous years to bump up my tax free lump sum? I've heard average of last 3 years?; highest in last 5 years? highest in last 10 years?

thanks
I have a notion it's the average of the highest 3 in your last 10. But you need to get advice on this. Unless your AVC was taken out execution-only, the seller is the first person you should contact.
 
The scheme will base the tax free lump sum on your pensionable salary (this may be less than the €100k you earn). The Revenue allows other payments such as bonuses and BIK to be included as salary. It is the best 3 consecutive years from the 10 previous before retirement. You can use your AVC's to boost this.

If you are in a DB scheme, the administrators should be able to show you your options.

Steven
www.bluewaterfp.ie
 
You also have the option of putting the avc into an ARF and not use it for maximising the TFLS. Using the scheme commutation may be more beneficial. It will depend on the commutation factor within the scheme.
And some schemes are now quite happy to give TFLS up to revenue limits ( not just pensionable salary) if the trust deed allows it and many do in the fine detail.
This reduces the annuity cost and liability valuation for the scheme.
And at this stage you should check that your fund is moved to cash until you decide.

Request a leaving statement and a meeting with a financial advisor from the pension administrators.
 
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