Irish Life MAP Funds and tax

[IrishGunner]

Ok starting up investment with IL and their MAP funds and spoke to their Financial Advisor

So have lump sum and also going to do Top ups

However for the lump sum(which was in a Quinn fund and Irish Life took this over) they came back with this

You have invested €X and current value is €Y so any growth in value on the Quinn Funds is tax free until value exceeds amount invested however by closing the existing plan and transferring to MAPs it will mean any growth over €Y will be subject to 41% exit tax Where X> Y

however if you were to leave the QLD fund the way it is and let it recoup some of the lost value and then transfer it, it means that you will eventually pay less in the long run, for example if the value grows to €20k in maps, exit tax is charged on excess € A, whereas if you were to transfer it when the QLD fund recovers, you would only pay the exit tax on approx. €B growth. Where A > B

So any gains are charged at 41% and even if I leave it in for 10 years plus still the same?

I am not looking at avoiding tax but just wondering is this worth it or is it worth checking around for this lump sum to get better options?

Its a savings plan so want to leave it in for 10 years +

All help appreciated

 

[jpd]

I am confused by all the A,B,X and Y stuff - putting in actual values would make it much clearer

I think what they are saying, is that your Quinn Life fund is making a loss ie its value is less than you originally invested. If you leave it in Quinn Life, any gains made from now on will be tax free until it reaches it's initial investment value - gains beyond that are taxed at 41%

Whereas if you exit the Quinn Life fund now and transfer to Irish Life, any gain from the date of transfer will be taxed at 41%

If the cost structure and funds allocation are similar than I would leave it until such time as it recovers to its initial position

 

[GSheehy]

IMHO, the only time to transfer where Life Assurance Exit Tax applies is where the the original investment amount is equal to the transfer value, and the only reason you'd do this is where you can buy the same/very similar product at a lower cost . Otherwise you're consolidating a loss or triggering a tax on a gain.

I wasn't aware that ILAC would treat an investment, that was originally through Quinn and now part of ILAC, as a separate 'new' policy and that an internal switch couldn't be done. It looks like the Quinn book of business is ring-fenced.

 

[IrishGunner]

Thanks for the replies

X Y and Z etc just did not give amounts for personal reasons

Yes its an old Quinn Life but the returns on this are very low and I'm not sure if any other fund investments for Quinn available tow switch to?

What questions should I be asking Irish Life before I decide what's best for me

 

[GSheehy]

Can't think of a reason why you wouldn't be allowed to switch to another of the original QL Funds, unless they've been discontinued. If you can, is there a cost.

Can you do an internal switch to an ILAC MAPS fund. If not, why not.

Can you top-up the original policy and what are the costs. If you can do so cheaply but are being steered to a 'new' policy then there might be a commission motivation.

Maybe do a bit of research yourself to establish if there's something as/more competitive available on the market.


Gerard

www.bond.ie

 

[PMU]

Yes its an old Quinn Life but the returns on this are very low and I'm not sure if any other fund investments for Quinn available tow switch to?

IL's web site shows there are 13 funds you can switch into; 1 medium risk; 9 high risk and 3 unranked. (These are old QL funds transferred to IL.) What you switch into largely depends on your risk profile and what other investments you already have. You can switch online, but as pointed out above (post #2 above) if you switch out of the policy you are in (i.e. to non-QL funds), you are crystallizing a loss and any future gains will be taxed at 41%.