Pension tax free lump sum

irishguy

I have a defined contribution employer pension, which will be going into an arf. Is it 25% of the total fund or is it limited to €200,000 aswell?

https://www.pensionsauthority.ie/en/lifecycle/tax/tax_on_lump_sums_at_retirement/

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.

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.

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