Tax free cash from Buy out Bond

martinn123

Hi all,

I have 150k plus in a Buy Out Bond purchased Many years ago when I left an employment of 20 yrs.

I have turned 60, and one option in my recent literature from Insc Co, is to take a tax free sum and a annuity.

I would prefer to leave the majority in the fund for a few more years as annuity rates are so low, but would welcome the withdrawal of the cash element.

Is this possible, subject to Revenue rules.
Cheers.

Browney7

martinn123 wrote: »

Hi all,

I have 150k plus in a Buy Out Bond purchased Many years ago when I left an employment of 20 yrs.

I have turned 60, and one option in my recent literature from Insc Co, is to take a tax free sum and a annuity.

I would prefer to leave the majority in the fund for a few more years as annuity rates are so low, but would welcome the withdrawal of the cash element.

Is this possible, subject to Revenue rules.
Cheers.

It was the case before if you took tax free lump sum based on your final salary (1.5 times salary in your case with 20 years) the remainder would have to be an annuity - not sure if still the case.

If you took 25% tax free you could have the ARF option whereby you can keep it invested.

Another consideration, do you need the cash now and what do you intend to do with the lump sum? If you were going to invest the tax free lump sum why not leave the whole lot where it is and continue to grow tax free instead of paying dirt or exit tax. You'll probably want to spend a bit though and why not, you deserve it :-)

martinn123

Browney7 wrote: »

It was the case before if you took tax free lump sum based on your final salary (1.5 times salary in your case with 20 years) the remainder would have to be an annuity - not sure if still the case.

If you took 25% tax free you could have the ARE option whereby you can keep it invested.

Another consideration, do you need the cash now and what do you intend to do with the lump sum? If you were going to invest the tax free lump sum why not leave the whole lot where it is and continue to grow tax free instead of paying dirt or exit tax. You'll probably want to spend a bit though and why not, you deserve it :-)

Many thanks for your reply.

ARE?? could you elaborate.

With regard to the Tax-Free sum, I do have a small business which could benefit from an injection of funds, which will give me a better return than current growth rates, ( plus I really need to upgrade my car )

Browney7

martinn123 wrote: »

Many thanks for your reply.

ARE?? could you elaborate.

With regard to the Tax-Free sum, I do have a small business which could benefit from an injection of funds, which will give me a better return than current growth rates, ( plus I really need to upgrade my car )

Edited my post. Meant to say ARF - approved retirement fund. You basically invest what's left after tax free cash in a fund (loads of options, self directed, deposits, managed funds, property funds etc) and you have to withdraw a certain % each year. If your needs changed and annuity rates went up (which they will as you get older) you could buy one at a later stage

martinn123

Browney7 wrote: »

Edited my post. Meant to say ARF - approved retirement fund. You basically invest what's left after tax free cash in a fund (loads of options, self directed, deposits, managed funds, property funds etc) and you have to withdraw a certain % each year. If your needs changed and annuity rates went up (which they will as you get older) you could buy one at a later stage

Thanks again.

I had a look at the Rules regarding ARF, and it appears I must have a guaranteed Pension income, ( which I do not ), I do have an income from my current business, otherwise it goes into an AMRF.

Is this correct.

So how do I get this ball rolling, do I apply to Revenue, or can my current Buy out Bond Insurance Co do the paperwork.

NewCorkLad

After taking your 25% tax free lump sum, you would need to invest the first €63,500 in an AMRF which would be invested until you are 75, currently you can draw 4% of this a year as an income if you wish. The remaining €49,000 would then be invested in an ARF which under current rules you would need to draw a minimum of 4% a year as an income but you can take more if you want. If you wish then in the future you can use these funds to purchase an annuity or just continue to use the AMRF/ARF as your pension.

NewCorkLad

martinn123 wrote: »

So how do I get this ball rolling, do I apply to Revenue, or can my current Buy out Bond Insurance Co do the paperwork.

Contact a broker you will get independent advice and a better deal.

martinn123

Conflicting Advice, having consulted a Broker.

I am now being advised, that the option to take the Tax-Free lump sum is subject to the Rules of the Pension Scheme, of my original employment, and that the Annuity MUST be taken at the same time.

So I may not have the option of the AMRF/ARF, as outlined in above posts.

Can anyone point me to a definitive regulation here, as the Annuity Rates available are not particularly attractive at present.

NewCorkLad

martinn123 wrote: »

Conflicting Advice, having consulted a Broker.

I am now being advised, that the option to take the Tax-Free lump sum is subject to the Rules of the Pension Scheme, of my original employment, and that the Annuity MUST be taken at the same time.

So I may not have the option of the AMRF/ARF, as outlined in above posts.

Can anyone point me to a definitive regulation here, as the Annuity Rates available are not particularly attractive at present.

Was it a defined contribution or defined benefit pension scheme.

martinn123

NewCorkLad wrote: »

Was it a defined contribution or defined benefit pension scheme.

Defined Benefit.