Pension Lump Sum
- Thread starter AKMuller
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Yes you do. I don't complete Form 12 online, but if you look at section 7 (starts at the bottom of page 5 of the pdf version [at this link: https://www.revenue.ie/en/self-assessment-and-self-employment/documents/form12.pdf ] you'll see where to insert it. (I assume that the online Form 12 follows the same sequence.)
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?
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?
fistophobia
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Why does a tax-free lump sum need to be declared?
Whats it to them in Revenue? None of their business.
Whats it to them in Revenue? None of their business.
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.
So Revenue needs details of any lump sums taken from a pension to be disclosed.
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?
They already get them disclosed by the pension administrators when they are claimed
I'm assuming that I'm still required to declare them?
Again, anybody know if I'm filling in the form correctly above?
AndroidMan
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Do you have to take that 25% immediately?
Or say 10% today.
And the 15% a year or two later?
This gives that 15% a chance to hopefully generate more growth.
Plus that 15% I assume would still be 15% of the value of the pension at the time I took out the 10k.
LDFerguson
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If you have just one pension scheme fund / policy, then no - you must take the lump sum in one go.
You can choose to split PRSAs into multiple smaller PRSAs and retire each of them at different times, which gives a similar result.
CharlieMac
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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?
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?
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.
https://m.independent.ie/business/m...ways-the-smartest-thing-to-do/a512610867.html
Interesting article in today’s Sunday independent
Interesting article in today’s Sunday independent
LDFerguson
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AVC PRSAs and PRSAs have different rules. PRSAs can be split to facilitate retirements at different times. AVC PRSAs cannot.
Thanks for the clarification @LDFerguson - the complexity of pension options and rules never ceases to confuse me... 
CharlieMac
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This came up before @LDFerguson and maybe I incorrectly understood your point about splitting a PRSA. Do you know if an AVC PRSA policy can be split into two policies?
I am interested in buying back "pension years" (Single Pension Scheme) from my PS employment at retirement by transferring value from an AVC PRSA. Then put whatever is left over in an ARF.
The Single Pension Scheme administrators told me I could not use "some" of the funds from an AVC PRSA for this purpose and put the remainder in an ARF. The only way to purchase additional pension benefits by way of transfer is to use the entire value of a PRSA or AVC PRSA because a "partial transfer" from these is not allowed due to Revenue rules.
Do you know could I split a AVC PRSA fund in to two policies at retirement, use one pot made to have just enough so I can transfer the full amount of it to buy "back pension years" from my PS employment and use the other as an ARF? I would still plan on "retiring" both policies at the same time to abide by the Single Pension Scheme rules requiring that.
My strategy would be specifically to start with one policy and later split it rather than open up two policies from the get go.