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AVC drawdown implications

  • 03-03-2016 2:15am
    #1
    Registered Users, Registered Users 2 Posts: 2,242 ✭✭✭


    I have an AVC pot of roughly 200,00
    I am considering taking 30% of this as a draw down before 27th March.
    i know i will pay tax at 40% and no USC or PRSI.
    Question is I may be taking voluntary redundancy ( approx 270,000)early next year and I want to know if the 60,000 draw down can be used as income for SCSB purposes for calculating my tax free allowance on the ex gratia payment part of the redundancy package.Approx 230,000
    Example
    A =Average pay over the last 3 years is 92,000 without draw down considered
    B = 35 full years service
    C= Amount taken as a tax free sum from an approved pension scheme
    AxB/15-C =TAX FREE ALLOWANCE
    In this case
    9200 x 35 /15 =214,666 so i could take 214,666 tax free from my AVCs to give me the maximum tax free allowance of 200,000 on the ex gratia portion of the package
    Revenue consider the draw down as schedule E income and tax it as such,and the financial institution will issue a P45 in respect of the payment.
    Will my employer be allowed to add the 60,000 draw down to my previous 3 years salary to increase my SCSB calculation as below

    A=112(92,000+20,000)
    B =35

    112,000 X 35 /15=261,333
    This would allow me to take 61,333 (46,667 extra) as a tax free payment from my AVCs and still keep a TFA OF 200,000 for the ex gratia payment
    Hoping someone can tell me whether this is possible and if I am on the right track as my employer has no idea as of yet
    Thanks in advance


Comments

  • Registered Users, Registered Users 2 Posts: 2,242 ✭✭✭brisan


    Sorry boards wont allow me edit,but the first line should have said "an AVC pot of 200,000 not 20000


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