Pensions and Tax Free CashWith the advent in 1999 of Company Directors being allowed to avail of 25% of their accumulated fund tax free and ARF the balance, many advisors and pension holders often overlook the fact that the old rules for calculating maximum tax free cash remain in place.
The attraction of a Tax Free Lump Sum, rather than a taxable pension at retirement can be extremely appealing when it comes to talking about pensions. I have seen many cases over the years where nay-sayers of pensions suddenly sit up and take notice when the possibility of availing of their entire fund tax free is brought to their attention.
Establishing an Executive Pension as a “Tax Free Cash Arrangement” rather than a pension can be an intriguing proposition. This is because what is on offer is an Executive Pension contract which offers full employer tax relief on contributions, tax free growth on any returns and the entire fund availed of tax free at retirement (subject to a cap of €200,000).
Broadly speaking, an employee or director or working spouse of a director (or indeed working spouse of a sole trader) who has 20 or more years paid (Schedule E) service with that employer at Normal Retirement Age can qualify under the Revenue uplifted tax free cash scale for a tax free lump sum of 1.5 times their final salary (which in most cases must be averaged over 3 or more years).
To see if this would work for you, please contact us on 087-2902206 or alternatively at
David Peavoy BA, QFA, LIAP is the Owner of Peavoy Financial Planning whose practice is based in Office 5b, Portlaoise Enterprise Centre, Clonminam Business Park, Portlaoise, Co Laois.
David Peavoy T/A Peavoy Financial Planning is regulated by the Central Bank of Ireland
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