Withdrawal from ARF before reaching 61.

Joebloggs said:
If he works for 13 weeks during the Calendar Year of his 62nd Birthday, should he sign on for Credits also ?
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The important thing is to have a minimum of 39 contributions during the calendar year of his 63rd birthday. These can be either full rate paid class A, or Jobseekers credits..

So he would be okay not to sign on in other calendar years.

But to make sure he doesn't get confused and forget to sign on for the calendar year of his 63rd birthday, I would recommend signing on each year.

There is only one sign on date each year, so it's easy to do.

This is also a good idea, just in case there are any rules changes made for BP65.

The signing on for credits and working for 13 weeks is only in order to qualify for BP65.

This is a great extra bonus, as you state.

However his class S will get him all the reckonable paid prsi contributions he needs for the COAP.
 
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So, if you don't mind @S class, to sum up both my original question and the new information/strategy you provided/suggested.

If I withdraw €5000 per anuum from my ARF each year from 2025 to 2030 I'll have 312 Class S contributions. On top of my 1800+ Class D contributions (which have no financial value but give value to my Class S contributions) this will give me a small COAP from when I turn 66? I calculate the pro rata pension at about €40 odd. Does all that make sense?

Thanks again.
 
@4ofablue

Yes that looks correct.

You could be in a good position to benefit from deferring your COAP up to age 70 or possibly a bit sooner.

Try to calculate if you could manage to reach 520 class S contributions up to age 70.

If your ARF becomes depleted, you can make voluntary contributions up to age 70. These would cost 650 euro per year.

If you could manage this your pension would increase to approximately 88 euro per week.

You could break even at age 74 and from then on you would gain approximately 2500 euro extra per year.
 
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Thanks again @S class

Continuing the €5000 per annum withdrawal shouldn't be an issue (fingers crossed) so I'd have 520 Class S contributions by the end of 2034. I'll be 70 in February 2035 (assumptions!).

I presume you mean I would defer the pension at 66 in favour of taking it at 70?

And obviously I don't have to make any decisions on this imminently apart from processing the first 5k withdrawal this year?
 
S class said:
You could be in a good position to benefit from deferring your COAP up to age 70 or possibly a bit sooner.
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4ofablue said:
I presume you mean I would defer the pension at 66 in favour of taking it at 70?
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Deferring your State Pension (Contributory)

You can start to claim your State Pension (Contributory) at any age between 66 and 70. This page explains who can defer (delay) their State Pension (Contributory), rates for different age groups, and how to apply.
www.citizensinformation.ie www.citizensinformation.ie
S class said:
You could break even at age 74 and from then on you would gain approximately 2300 euro extra per year.
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How so?

Deferring your State Pension (Contributory) - break even point is age 88

Age when you start to claim Maximum rate per year diff v 66 Age 66 €277.30 €14,469.51 €0.00 Age 67 €290.30 €15,147.85 €678.34 Age 68 €304.80 €15,904.46 €1,434.95 Age 69 €320.30 €16,713.25 €2,243.74 Age 70 €337.20 €17,595.10 €3,125.58 Age 66 67 68 69 70...
www.askaboutmoney.com
 
@4ofablue

Yes that's it exactly. You don't have to decide until you reach age 66.

If your health is good then, it would make sense to defer.

You could begin your COAP on 1st January 2035.
 
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@4ofablue

There could also be a possibility of claiming your COAP much earlier in 2034.

If you took a lump sum drawdown from your ARF of 5k in January 2034.

You would have your 520 class S immediately and you could then apply for your COAP.

As insurance, in case this was not acceptable to DSP, you could choose payment of your pension into your local post office.

lf the pension calculation was not based on 520 paid Prsi contributions, you can reject the pension provided that you have not taken any payments.

You could then reapply on 1st January 2035.

If this worked the COAP would be slightly lower as it would be based on age 69 rather than 70.

But the payback time for the slight extra pension amount you would gain by waiting until age 70 would be far longer than 4 years. You would need to get your calculator out to check the extra break even time.

You could again decide your strategy when you are near age 69.
 
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Follow up on this.

So I processed the €5000 withdrawal from my ARF with Irish Life. It was in my account the next day, BUT...I don't have the payslip yet but they taxed it at a flat 40%. The girl on the phone told me the breakdown of deductions was €2000 tax, €400 USC and €205 PRSI.

I rather naively (with hindsight) assumed that they would look after the tax calculations. Do I correct this with Irish Life or with Revenue?
 
Irish Life would apply for an RPN from revenue.

This instructs them to deduct tax and USC at the correct rate.
They must have received instructions to apply emergency tax.

You can correct this on your myaccount.
Allocate 5k of your 20% band and 5k of a lower USC band to Irish Life.

When this is done contact Irish Life to see if they can correct the tax deductions.

If they can't, contact Revenue to see if your can get a tax refund.

If all this fails you would need to complete a statement of liabilities in January 2026 to get a tax refund.

The important thing is that the correct Prsi is paid. This guarantees your 52 class S for 2025.
 
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Thanks @S class.

I see that revenue issued me an amended tax credit certificate allocating no tax credits to Irish life and setting USC at 8% for Irish Life. I presume this was issued at the instigation of Irish Life.

The correct USC rate should be 3% on all of the 5k. Tax is more complicated as I don't have the full 5k to allocate to the 20% band.

There's an asterisk on the tax credit certificate: *This denotes that this employment Tax Credit Certificate was issued on a Week 1/Month 1 basis.
That means emergency tax?

Edit: I've corrected things on my Revenue account. I'll follow up with Irish Life when I get the amended amended tax credit certificate!
 
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4ofablue said:
There's an asterisk on the tax credit certificate: *This denotes that this employment Tax Credit Certificate was issued on a Week 1/Month 1 basis.
That means emergency tax?
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This means that they divide your yearly credits and 20% tax band out for each week or month depending on how often you are paid.

This is not emergency tax.

Emergency tax means that all your income is taxed at 40% and 8% USC.

If you go into your myaccount, there is a section for dividing out your credits and 20% tax band and USC rates between your different employments and pensions.

You can choose a new Revenue calculated formula or you can input your own figures.

Firstly select the new Revenue calculated formula. In my experience this is never satisfactory.

If you are not happy with it you can then submit your own instructions.

Submit 5k of your 3% band to Irish Life for USC.
Submit your spare 20% tax band amount to Irish Life.

If you don't urgently need the extra money you will get from correcting this now, it is easier to just leave it as is, and submit your statement of liabilities in January 2026.

All tax and USC are then automatically calculated to make the best use of your credits and 20% tax band and your lowest USC bands.

You will get a tax refund within a few days of this.
 
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