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Pension tax free lump sum

Comments

  • #2
    The J Stands for Jay
    Registered Users, Registered Users 2 Posts: 5,786 ✭✭✭The J Stands for Jay


    Your pension lump sum is 25% of the fund. The first 200k is tax free. The next 300k is taxed at 20%. The rest is taxed as PAYE income.



  • #3
    abff
    Registered Users, Registered Users 2 Posts: 5,769 ✭✭✭abff


    https://www.boards.ie/discussion/comment/119242066#Comment_119242066

    Just to clarify the above comment. You are not obliged to take any of your pension fund as a lump sum, but you have the option of taking up to 25%.

    If you are fortunate enough to have a fund that is worth in excess of €2M, your best option would probably be to take €500k as a lump sum, on which you would pay €60k tax as outlined above by Jay.

    Please note that it is also possible to take a lump sum calculated on a salary and service basis, which might possibly be higher depending on your circumstances. However, this would restrict the options you would have in relation to the balance of your fund.



  • #4
    The J Stands for Jay
    Registered Users, Registered Users 2 Posts: 5,786 ✭✭✭The J Stands for Jay


    https://www.boards.ie/discussion/comment/119266053#Comment_119266053

    Just to go even further down the rabbit hole...


    If you're over 2 million, you're better off taking the lump sum at 20% tax too because that tax can be offset against the excess fund tax for being over 2 million.

    In case it's not obvious from this conversation, professional advice is essential in making retirement decisions



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