ARF re-invest in PRSA

Rust40

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I'm over 60, in employment but need to access my DC TFA. If I take out an ARF/AMRF can 40% of drawdown be re-invested in PRSA?
 
What's the Normal Retirement Age on the DC scheme? Is this the scheme of your current employment? If you haven't reached the Normal Retirement Age, you'll need to request that the Normal Retirement Age be changed to your age in order to draw the tax-free lump sum and continue in the employment.

You can't claim tax relief on pension contributions against income drawdown from ARFs; only earned income.
 
As Dave said above, you can't invest proceeds of ARF or tax free lump sum into a PRSA and claim tax relief. So if you have no earned income, you can't make a pension contribution and claim tax relief on it.

But say you got €250,000 tax free lump sum but didn't need it all. You are 55 yo and earn €100,000, so you can put €35,000 into a pension. As long as it's within the earning limits, the Revenue won't check that the source of the funds came from a pension tax free lump sum.


Steven
www.bluewaterfp.ie
 
If permitted I have a question on an old DC pension too.

The value of the pension is just under 100k (98,900) and the last statement 2017 said that the annual pension would be 7250 pa, from normal retirement age which I take it is 65.
I was saying to my wife that she could take 25% of that pension now and put the balance into another pension and on retirement she could add all the pensions into one arf?
I dunno why I think this and would like clarification.
Her other pensions will be over 1.3m by the time she is 62 assuming a 5% growth which is about half that she is enjoying over the last few years.

I'd appreciate any thoughts as we are trying to get all of our financial stuff together and sent to solicitor as part of having our wills recently done.
 
If she accesses the Retirement Lump Sum (25%) then she has two choices with the 75%:
- invest it in an ARF/AMRF and draw down some income annually (min/max 4%), or
- buy an annuity from a Life Office

She cannot just transfer the 75% into another pension .
 
If permitted I have a question on an old DC pension too.

The value of the pension is just under 100k (98,900) and the last statement 2017 said that the annual pension would be 7250 pa, from normal retirement age which I take it is 65.
I was saying to my wife that she could take 25% of that pension now and put the balance into another pension and on retirement she could add all the pensions into one arf?
I dunno why I think this and would like clarification.
Her other pensions will be over 1.3m by the time she is 62 assuming a 5% growth which is about half that she is enjoying over the last few years.

I'd appreciate any thoughts as we are trying to get all of our financial stuff together and sent to solicitor as part of having our wills recently done.

If she needs / wants the 25% of the old DC scheme now as a lump sum, she could take it. Out of the remaining €75,000 (ish) she could put the first €63,500 into an AMRF and put the remaining €12,000 (ish) into an ARF. Then when the time comes for her to draw her larger DC fund, she can take a lump sum from it and put the balance into the same ARF she already set up. I hope that makes sense.

That said, I'm not a fan of accessing lump sums from pensions early unless there is a sound financial reason for doing so, e.g. pay down some expensive debt. If not, then she can simply leave the whole lot where it is until she's ready to retire and then do it all together.
 
If she needs / wants the 25% of the old DC scheme now as a lump sum, she could take it. Out of the remaining €75,000 (ish) she could put the first €63,500 into an AMRF and put the remaining €12,000 (ish) into an ARF. Then when the time comes for her to draw her larger DC fund, she can take a lump sum from it and put the balance into the same ARF she already set up. I hope that makes sense.

That said, I'm not a fan of accessing lump sums from pensions early unless there is a sound financial reason for doing so, e.g. pay down some expensive debt. If not, then she can simply leave the whole lot where it is until she's ready to retire and then do it all together.
Thank you and I agree with not taking lump sums now and we don't need it , but like always other "information " and the spectre of CAT when we are both gone, I said to her " our children will be almost our age in 30 years time and they can sort out their own taxes, afterall they aren't going to short now are they ".
 
If she needs / wants the 25% of the old DC scheme now as a lump sum, she could take it. Out of the remaining €75,000 (ish) she could put the first €63,500 into an AMRF and put the remaining €12,000 (ish) into an ARF. Then when the time comes for her to draw her larger DC fund, she can take a lump sum from it and put the balance into the same ARF she already set up. I hope that makes sense.

That said, I'm not a fan of accessing lump sums from pensions early unless there is a sound financial reason for doing so, e.g. pay down some expensive debt. If not, then she can simply leave the whole lot where it is until she's ready to retire and then do it all together.
Would the additional bonus via tax relief achieved by using the pension lump sum to fund additional AVCs constitute a sound financial reason? Likely 40% bonus, assuming not exceeding any limits.
 
Would the additional bonus via tax relief achieved by using the pension lump sum to fund additional AVCs constitute a sound financial reason? Likely 40% bonus, assuming not exceeding any limits.

It can do, with careful planning. Depends on individual circumstances. In some ideal circumstances, all AVCs can be withdrawn tax-free at retirement as a top-up to the tax-free lump sum. If so, then the 40% tax relief on AVC contributions is a giveaway. At the far end of the scale, if the AVCs are only going to top up income and retirement income is going to be taxable at 40% plus levies anyway, then there's little point in making AVCs at all. On the way in 40% tax relief. On the way out, 40% tax plus levies.

It's a question that must be looked at in the context of individual circumstances.
 
It can do, with careful planning. Depends on individual circumstances. In some ideal circumstances, all AVCs can be withdrawn tax-free at retirement as a top-up to the tax-free lump sum. If so, then the 40% tax relief on AVC contributions is a giveaway. At the far end of the scale, if the AVCs are only going to top up income and retirement income is going to be taxable at 40% plus levies anyway, then there's little point in making AVCs at all. On the way in 40% tax relief. On the way out, 40% tax plus levies.

It's a question that must be looked at in the context of individual circumstances.
Many thanks, that's pretty much what I was thinking as outlined in my earlier thread;

 
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