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Pension Question - advice needed

  • 16-06-2012 5:34pm
    #1
    Peanut6
    Registered Users, Registered Users 2 Posts: 22 ✭


    Hi,
    My Dad is 64 this August, self employed, but has all but retired at this stage. He recently found out he has two PRSA's worth approx 16k. He's wondering what his options are in terms of encashing them and the penalties that might be applied.
    Am I right in saying that as he's self employed and over the age of 50, he'd be entitled to a 25% lump sum and then would just be taxed at the lower rate on the balance?

    Also, would he be better served combining the two before encashment?

    Would be grateful for all advice received on this one!

    Thanks


Comments

  • #2
    HowFinancial
    Registered Users, Registered Users 2 Posts: 71 ✭✭HowFinancial


    From the above your Dad is entitled to draw down the benefits from his PRSAs now if he so chooses.
    However, you say he is all but retired at this stage... Does he have income from other sources? This is important, because, excluding the 25% Tax Free Lump Sum, howsoever he draws on the balance of his accumulated funds (Taxable Lump Sum, annuity (i.e. regular income) or if eligible an ARF) then this will be taxed at his marginal rate. If he is currently paying higher rate PAYE, but may be paying lower rate PAYE at a later date THEN it is worth considering deferring taking benefits from his PRSAs.

    Whichever the case I'd suggest shopping around for the best solution. If there is a Financial Advisor you know & trust then go to them and they will do the shopping around for you as well as taking any personal financial circumstances into consideration and give you a steer for the best route to take.

    p.s. usually no charge for a consultation with a Financial Advisor (not because they are doing you a favour, but because they get paid by the insurance/life companies, and I'm speaking as a financial advisor myself).


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