Tax Relief for Pensions

The maximum allowable pension fund on retirement for tax purposes is €5,418,085. This is adjusted annually in line with an earnings index. the maximum will apply to the aggregate value of all pension funds heald by an individual. Where the fund exceeds the relevant limit, the excess in the pension fund will be subjet to a once - off income tax charge at the individual's marginal income tax rate when it is drawn down.  

Lump Sums

Currently up to 25% of a pension fund may be taken as a tax free lump sum without limit. The maximum tax free lump sum that can be taken on or after 7th December 2005 is €1,354,521 or 25% of the fund, whichever is the lower. Any excess above this amount will be taxed at the marginal income tax rate. Where more than one lump sum is drawn down the aggregate value of those lump sums is subject to the limit. 

ARF's

An annual 3% imputed taxable distribution will apply to the value of an ARF at 31 December each year. Any actual distributions from the ARF during the year will be deducted from that year's imputed distribution and any net amount will be taxed at the individual's marginal income tax rate. This charge will apply to ARF's created on or after 6th April 2000. 

Should you require any further information, please contact Susan Lennon.

Email: slennon@annebrady.ie