ARF annual withdrawal query

[daithi28]

Theoretical example - I have built up an AVC of say €180,000 by retirement age and I transfer the pot into an ARF. From reading online it appears that I can only draw 4% per annum from the ARF equiv to €7,200.

If the ARF is making say 4% interest (for simplicity), it means that while I'm drawing my annual €7,200, the pot is still at €180,000.

Is there anything I can do if I want more than 4% in a given year or if after years of drawing down €7,200 I want access to the pot as a lump sum or partial lump sum?

 

[jpd]

You can withdraw any amount you want from the ARF - it is taxed as income

The 4% is what the Revenue will assess income tax on, but you can withdraw from 0% to 100% at any time

 

[NoRegretsCoyote]

I can only draw 4% per annum from the ARF equiv to €7,200.

As I understand it if you draw less than 4% of the ARF's value you are still taxed on on having withdrawn 4% of the value, so there are very few circumstances where it makes sense not to draw down at least 4%.

If you draw down more than 4% in a given year you are just taxed on the drawdown. For big sums that's going to push you into the top tax bracket if you're not there already.

Once you turn 70 it becomes 5%.

 

[bstop]

You can withdraw any amount you like. This can be useful if you have earnings below the 40% tax band. You can adjust your total ARF drawdowns to the exact maximum level of your of your 20% tax band. The only time you might have a restriction on your drawdowns is in the first few years of the ARF if you have negotiated a better charges deal with the provider in exchange for an early encashment penalty.