Are you credited these as a non resident?Why? Because I want to get the 52 PRSI credits towards the COAP from the distributions.
I would assume so as I currently already pay the €500 annually for the 52 contributions under the voluntary scheme.Are you credited these as a non resident?
But that’s for people who have left Ireland and don’t contribute to another social insurance scheme in the EU.I would assume so as I currently already pay the €500 annually for the 52 contributions under the voluntary scheme.
I don't think that the 500 euro minimum is being applied. In my case for 2022 I have an ARF drawdown of over 5000 but a lot less than 12500 euro. Zurich has charged the 4% Prsi and the total for the year is less than 500 euro. I have received 52 S class contributions.If a person under the age of 66 is receiving a distribution from an ARF then any income of €5,000 or more will incur a PRSI (Class S) charge of 4% or €500, whichever is greater. Class S contributions may be used to qualify for the State Pension (Contributory).
As €500 is the minimum PRSI charge, you might as well draw down €12,500 per annum, which is below the income tax and USC thresholds.
Yes the former applies in my case. I had over the 520 contributions when I left Ireland and I am no longer an employee in Germany, so I am not subject to German social insurance (for pension purposes) and making voluntary contributions to the German state pension system is a terrible deal for most people, so I do not contribute to it any more, choosing alternative investments instead. I am therefore eligible to make voluntary PRSI contributions at class V1 in Ireland. I do not pay any PRSI on my Irish rental income at all as I am non-resident.But that’s for people who have left Ireland and don’t contribute to another social insurance scheme in the EU.
It’s a while since I checked but IIRC non-resident landlords don’t pay Class S PRSI so I would assume same principle for ARF income (open to correction).
My understanding is that ARF drawdowns are at Class S, not Class A. See here.Do you think the contributions made by my ARF provider to the DSP would be at some class other than A, because I am non-resident?
Who does not pay Class S PRSI? The following people do not pay PRSI at Class S: • Prescribed relatives such as a son, daughter, parent, brother or sister, who help a self-employed person with their business but who are not partners in the business; • People whose total income from self-employment, earned and unearned, and employment is below a certain amount, currently €5,000 a year; • People classified by the Revenue Commissioners as non-residents who hold solely unearned income;
Interesting.I don't think that the 500 euro minimum is being applied. In my case for 2022 I have an ARF drawdown of over 5000 but a lot less than 12500 euro. Zurich has charged the 4% Prsi and the total for the year is less than 500 euro. I have received 52 S class contributions.
Aha, so that is of course very interesting. I suppose the "income" was earned back when I was at IBM in Dublin, but payment of tax including PRSI was deferred until the pension is paid out. Are distributions from an occupational pension like this considered unearned income or deferred earned income?My understanding is that ARF drawdowns are at Class S, not Class A. See here.
https://www.askaboutmoney.com/file:///D%3A/Users/enrigs/Downloads/38671_0aa2cf3d831a4076b1b6208e1287d9f9%20(1).pdf (Guidance)seems clear that non-residents do not pay Class S on unearned income:
On the other hand I would imagine Mercer would by default deduct Class S PRSI and remit it to Revenue and it will show up on your DSP record. If you don't correct Mercer I doubt anyone will notice, the government generally isn't bothered when you pay them money, more the opposite.
The system is complicated. The Prsi is deducted by Zurich the "employer" at 4% under the paye system. This system does not allow the minimum 500 euro to be applied.Interesting.
That seems to be a bit of a glitch in the system.
I find that Zurich are very good at knowing the details regarding PRSAs and ARFs.I suppose I could ask for written confirmation from the Department that such PRSI deductions for non-residents at class S would be reckonable for the COAP before taking my pension early at all.
The pensions manual doesn't explicitly mention PRSI but does talk about PAYE:I find that Zurich are very good at knowing the details regarding PRSAs and ARFs.
You could enquire from them that if you set up an ARF as a non resident, would you be liable to pay PRSI.
13 Non-Irish residents and ARFs, AMRFs and retirement fund
balances
PAYE exclusion orders
Income and assets retained in an ARF (see paragraph 6) are beneficially owned by the
ARF owner. Distributions (including deemed distributions) from ARFs are generally2
treated and taxed as emoluments under Schedule E, regardless of the residence status
of the individual recipient.
As distributions from ARFs are not payments of pension, PAYE Exclusion Orders are not
issued in respect of such distributions.
PAYE Exclusion Orders are not issued where an individual takes the balance of his or her
pension fund as a taxable lump sum (see paragraph 5).
Oh, I can completely understand why Zurich simply deduct and remit 4%. After all, they have no idea what other income the beneficiary has beyond the ARF distributions.The system is complicated. The Prsi is deducted by Zurich the "employer" at 4% under the paye system. This system does not allow the minimum 500 euro to be applied.
Any extra to make up the shortfall to 500 euro would have to be charged using a system other than paye.
To collect any shortfall DSP would have to send a bill to the ARF holder.Oh, I can completely understand why Zurich simply deduct and remit 4%. After all, they have no idea what other income the beneficiary has beyond the ARF distributions.
What surprises me is that DSP gives a full “stamp” without the €500 minimum being met. That seems a bit of a glitch in the system to me but it certainly presents an interesting planning opportunity in certain circumstances.
I think the chance of that happening round to about 0%. But in your shoes it makes more sense to pay the voluntary contributions as you already are.I think it's a little too risky for me to chance the DSP turning around when I am 66/67 and saying "oh those contributions you've been making for the last 16/17 years don't count towards the COAP".
I agree at your age you should be in an all equities strategy for the DC fund. A mix of two state pensions, an all-equity ARF, and property is very well diversified retirement income.I am 45 this year and I am aiming towards just moving this entire pension fund into an equities based ARF.
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