If you have a new account but are having problems posting or verifying your account, please email us on [email protected] for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact [email protected]

What to do with my EBS Mutual Fund - encashment and tax

  • 29-11-2021 5:40pm
    Registered Users Posts: 75 ✭✭

    I have an EBS Mutual Fund as a result of the government savings scheme from over 20 years ago. I assumed I would have to pay CGT at 33% and recently I was looking to drawn down an amount every year up to my CGT tax free limit. Thankfully EBS informed me that when I drawn it down, I must pay 41% tax on the gains (stupid me). So now I'm wondering how to find a more tax efficient manner of using/accessing these savings.

    As a background, I am in my early 50’s and looking to retire in my early to mid 60's. When retiring early I will use my accumulated fund to a) to fund an ARF & b) take my full amount of tax free lump sum. I will use that tax free amount and some additional savings to fund me until state pension and some other pensions kick in between 65 and 68. So the likelihood is that the years running up to 65 or 68 my income may well be attracting a tax rate of 20%. So I really don’t want to be cashing in my Mutual funds at 41% tax while drawing a smaller income which is only being taxed at 20%

    I'm thinking of cashing in my Mutual Fund and using that to increase my AVC's into private pension. So while I might withdraw €10,000 from the Mutual fund and pay 41% tax, I would be getting almost all (well 40%) back by using for AVC payments.

    Does that seem like a good idea? Is there a benefit in keeping the money in a mutual fund v's pension (other than being able to cash it in at any time)

    Any advice would be useful.