Taking old pension when 50

D

dodo

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I know if you decide to take an old work pension after you reach 50 yrs and working in a new company that you can avail of 25% tax free upto 200k. Eg pension value 100k, 25k tax free, Then on the remaining 75K you pay 40% income tax, 8% USC, 4% PRSI. ?
So remaining 75K you get 48% of that.?
Is that correct.
 
From what I've learned, anything above the 25% will be taxed as normal income, so in and around 52% as a higher earner.
 
I thought I read on this forum that you can take another 25% at 20% tax even if you're a 40% tax payer?
 
Slim said:
I thought I read on this forum that you can take another 25% at 20% tax even if you're a 40% tax payer?
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No.

You can take a pension lump sum of 25% of the fund value. The first €200k of pension lump sums you receive tax free. The next €300k is taxed at 20% (Case IV, Schedule D of I'm remembering it right). Any part of the pension lump sum over €500k is taxed under Schedule E.

The balance of the pension fund, after the pension lump sum is paid, may be taken as a lump sum (rather than being used to purchase an annuity of ARF), taxable under Schedule E.
 
dodo said:
I know if you decide to take an old work pension after you reach 50 yrs and working in a new company that you can avail of 25% tax free upto 200k. Eg pension value 100k, 25k tax free, Then on the remaining 75K you pay 40% income tax, 8% USC, 4% PRSI. ?
So remaining 75K you get 48% of that.?
Is that correct.
Click to expand...

You can also take the 25% tax-free lump sum and transfer the other 75% into an ARF. You can defer taking anything from the ARF until the tax year you turn 61 when you start taking an income of at least 4% of its value.
 
Fortune said:
No.

You can take a pension lump sum of 25% of the fund value. The first €200k of pension lump sums you receive tax free. The next €300k is taxed at 20% (Case IV, Schedule D of I'm remembering it right). Any part of the pension lump sum over €500k is taxed under Schedule E.

The balance of the pension fund, after the pension lump sum is paid, may be taken as a lump sum (rather than being used to purchase an annuity of ARF), taxable under Schedule E.
Click to expand...
So, if I have a PRSA of €100k, I can take 25k tax free and if I take a further withdrawal, at the same time, it is taxed at my marginal rate?
 
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