Does a tax-free lump sum from a pension need to be declared to Revenue?

A

AKMuller

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Do you need to declare a tax free lump sum from a pension when filling out form 12 online?
If you do under what heading?
Thanks
AKMueller
 
Rather than create a new thread I thought I'd bump this one.

I'm doing this myself for 2024. I took a €10K tax free lump sum from my PRSA and, on foot of this thread, only now realised that I need to report it via my Revenue myAccount "Form 12" return...

Is this the correct approach - in particular zero for most of the fields in the actual form? Or should I just fill in the first two mandatory fields with €0 and €10K respectively?

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fistophobia said:
Why does a tax-free lump sum need to be declared?
Whats it to them in Revenue? None of their business.
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Well, there's the possibility that your lump sum exceeds the Tax Free Lump Sum (TFLS) threshold, so then they'd be keenly interested. Also, you might have a few pensions maturing over different years. If the sum of the lump sums exceed the TFLS (which is a lifetime limit, not a per pension limit) then once again, they'll be quids in and keen to collect.
 
Bear in mind that the aggregate tax-free lump sums that you can take from any pension arrangements is capped at €200k, lump sums between €200k and €500k are taxed @20% and any lump sums over €500k are taxed at your marginal rate.

So Revenue needs details of any lump sums taken from a pension to be disclosed.
 
kickstart said:
Also, you might have a few pensions maturing over different years.
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This is actually my situation. This lump sum is my first but I'll be doing this again over several years. Although it'll be a while before I hit the 25%/€200K limit.

Anyway, anybody know if I'm entering the correct details above?
 
Fortune said:
They already get them disclosed by the pension administrators when they are claimed
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I'm assuming that I'm still required to declare them?

Again, anybody know if I'm filling in the form correctly above?
 
Thanks @S class.
I'll update my 2024 return and see how it goes.
As it happens I'll have to switch to self assessment for 2025 as I'll have more than €5K non PAYE income (plus some PRSA drawdown PAYE income) starting this year.
 
Yes AndroidMan. To the best of my knowledge you have one opportunity to do this with each fund within the limits. So you must take it immediately. You are not permitted to take various bites at it over time.

g
 
I thought in the case where a TFLS derives from contributions from a particular employment, when you retire from that employment you have to take the full amount of the TFLS then?

In the case of me retiring from a public sector employment where I built up an AVC PRSA from that income the TFLS payment was going to be a one time only event? Even if I had split the AVCs in to several policies?
 
CharlieMac said:
I thought in the case where a TFLS derives from contributions from a particular employment, when you retire from that employment you have to take the full amount of the TFLS then?
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Maybe so with an occupational scheme but a PRSA can be split and the TFLS and ongoing drawdowns accessed incrementally in tranches as outlined by @LDFerguson above. Not sure about an AVC PRSA linked to a specific employment though.
 
I'm not sure if @LDFerguson means that an AVC PRSA cannot be split or that the pots resulting from an AVC PRSA that has been split cannot be retired at different times. Maybe you can split as long as you retire all the pots at the same time.
 
CharlieMac said:
I'm not sure if @LDFerguson means that an AVC PRSA cannot be split or that the pots resulting from an AVC PRSA that has been split cannot be retired at different times. Maybe you can split as long as you retire all the pots at the same time.
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Can't see any ambiguity here myself:
LDFerguson said:
PRSAs can be split to facilitate retirements at different times. AVC PRSAs cannot.
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And here:
LDFerguson said:
Splitting a PRSA enables you to "retire" each one at different times, which can be useful for some. You can't do that with an AVC PRSA as AVCs and AVC PRSAs relating to the same employment must all be retired at the same time.
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LDFerguson said:
Don't get me started on a rant or we'll be here all day.
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My favourite bit is how the introduction of PRSAs was supposed to simplify things, but they never brought in the rules to simplify things around the PRSA so if just added another layer of complication.

We already have Revenue and the Pensions Authority involved in pensions; it'll be fun when the Department of Social Protection join in whenever AE happens
 
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