Fair Deal Help

An asset and the income from an asset are two different things.

If the means test look at assets and income, then:
  • the ARF fund is an asset
  • the 3%/4% distribution from the ARF fund is income

Twofor1: you seem to be suggesting that the 7k pa income is somehow different from the 4% distribution - I suggest they are the same.

My father has an ARF. Each year he draws down 4% or 5% of the fund, which most people do, as there is an income tax anyways on a deemed distribution.

So you may as well draw down that %, as you will pay income tax on that % anyways.

So my father gets an annual ARF payment, classified as income, of 5% of the fund value.
 
Imputed distribution
One of the rules governing ARFs is that tax, Universal Social Charge and PRSI, if applicable, must be deducted as if income were taken, even if no income is taken in a particular tax year. Below we explain how this is applied to an ARF.

  • From the year you turn 61, tax is payable on a minimum withdrawal on the 30 November* each year of 4% of the value of the fund at that date. This withdrawal is liable to income tax, Universal Social Charge and PRSI, if applicable. From the year you turn 71 the minimum withdrawal is increased to 5%.
  • Where the fund value is greater than €2 million the minimum withdrawal will be 6%. If you have more than one Approved Retirement Fund (ARF) and these are with different managers then you must appoint a nominee Qualified Fund Manager (QFM) who will be responsible for ensuring a withdrawal of 6% is taken from the total value of your ARFs. It is your responsibility to let your ARF providers know if you have other Approved Retirement Funds and Vested Personal Retirement Savings Accounts with a total value of greater than €2 million.
  • Where a greater withdrawal is made during the year, tax will be paid on the greater withdrawal amount. The minimum withdrawal rate is set in line with the required imputed distribution amount which may be altered to reflect changes in legislation. You can choose to take a higher withdrawal amount if you wish.
  • You should seek advice on whether it is appropriate to draw down the 4%/5% or 6% of your fund value.
  • Annual imputed distribution reduces the benefit of gross roll up**.
*These amounts and the valuation dates may change as specified by the Government. The information is correct as at June 2015.
**The investments are allowed to grow tax-free until such time as an event happens which incurs a tax liability, known as a chargeable
event.
 
Protocol said:
Twofor1: you seem to be suggesting that the 7k pa income is somehow different from the 4% distribution - I suggest they are the same.
Click to expand...

And you are probably right, I have clearly stated I am not familiar with the workings of ARF / AMRF’s, I’m simply trying to get an understanding of these funds, and how they are treated for Fair Deal purposes.
 
Sarenco said:
Is that not treating the same funds as both an asset (while in the ARF/AMRF) and income (when distributed from the ARF/AMRF)? Surely that can't be right.

Presumably the HSE doesn't include the actuarial value of a public sector pension as an asset – it simply treats the payments received as income. No?
Click to expand...
Sorry for delay in replying. Yes, it seems to be double assessing but I did query it and read up the regs. Be interesting to see how JopliOne's appeal goes.
 
Reviving old thread I know but, to avoid the apparent double-counting of assets and income, what's to stop someone nominally taking no income out of their ARF, paying the 7.5% of fund value as asset based contribution and filing with Revenue on the basis of the 7.5% drawdown?
 
Dementia needs a specialist type of care, I don’t think an au pair type arrangement would work, only if it was in addition to having more qualified careers helping.
 
You must log in or register to reply here.
Back
Top