What happens in practice if a member of a defined benefit scheme has overfunded their AVC when they go to draw down their pension?
I've read conflicting information on this issue in threads here. Some say that the money has to be refunded to the employer and / or scheme trustees. In other threads I've read that revenue refunds the contributions to the employee and then forces them to pay tax on it (Income Tax + USC? + PRSI?). So which is it?
If it's the latter overfunding might not be that bad? You're still able to avail of tax free compounding and the boost to compound interest from the loan of income tax from revenue until it comes time to draw down the pension.
I've read conflicting information on this issue in threads here. Some say that the money has to be refunded to the employer and / or scheme trustees. In other threads I've read that revenue refunds the contributions to the employee and then forces them to pay tax on it (Income Tax + USC? + PRSI?). So which is it?
If it's the latter overfunding might not be that bad? You're still able to avail of tax free compounding and the boost to compound interest from the loan of income tax from revenue until it comes time to draw down the pension.