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Bonus in pension.

  • 25-02-2021 12:36pm
    #1
    893bet
    Registered Users Posts: 8,727 ✭✭✭


    If you stick your bonus into your pension you get tax relief on the marginal rate.

    Do you still have to pay PRSI/USC on the bonus?


Comments

  • #2
    Saudades
    Registered Users Posts: 378 ✭✭Saudades


    I'm pretty sure you still pay PRSI and USC on a bonus, but best to ask in the Taxation forum.


  • #3
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,615 Mod ✭✭✭✭Henry Ford III


    Saudades wrote: »
    I'm pretty sure you still pay PRSI and USC on a bonus, but best to ask in the Taxation forum.

    Not if it's paid as a pension premium you don't.


  • #4
    spuddy
    Registered Users Posts: 772 ✭✭✭spuddy


    893bet wrote: »
    If you stick your bonus into your pension you get tax relief on the marginal rate.

    Do you still have to pay PRSI/USC on the bonus?

    If you're a PAYE earner, and your employer is giving you the option of using some / all of your bonus as an AVC, you you'll pay PRSI and USC. Make sure you have enough left over in that month's salary to cover the taxes!


  • #5
    Padre_Pio
    Registered Users Posts: 4,885 ✭✭✭Padre_Pio


    spuddy wrote: »
    If you're a PAYE earner, and your employer is giving you the option of using some / all of your bonus as an AVC, you you'll pay PRSI and USC. Make sure you have enough left over in that month's salary to cover the taxes!

    Yeh, but then you end up paying PAYE on the money you keep to pay the PRSI and USC.

    Bonus month is always a lean month for me. I put the lot into shares and pension.


  • #6
    abff
    Registered Users Posts: 5,713 ✭✭✭abff


    If you have the option of taking the bonus as a pension contribution, then you won’t be liable for USC or PRSI on it. But if it’s paid to you as a cash bonus and you decide to use it to pay an AVC, you will not get PRSI or USC relief on the contribution.


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  • #7
    athlone573
    Registered Users Posts: 726 ✭✭✭athlone573


    https://www.brokerzone.ie/resources/custom/brokerzone/pdfs/pension-post-issue-13.pdf

    This says different - that USC and PRSI will be due in most cases


  • #8
    Rothmans
    Registered Users Posts: 1,805 ✭✭✭Rothmans


    Pension contributions are only deducted from pay for the purposes of calculating PAYE. In calculating PRSI and USC, the relative rates of PRSI and USC are charged on your total income. In other words there is no PRSI or USC relief in relation to penions, just PAYE relief. That is to say, the maximum relief you can get on pension contributions is 40%.


  • #9
    893bet
    Registered Users Posts: 8,727 ✭✭✭893bet


    It went in as an AVC and prsi etc was paid.

    Two more questions.

    If I increase my monthly contribution is prsi etc due on the increase (basically asking is prsi and usc paid on my current contributions also really).

    The 20 percent max I am allowed at my age, is that just my personal contribution? Or 20 including my contribution and employers contribution ?


  • #10
    athlone573
    Registered Users Posts: 726 ✭✭✭athlone573


    893bet wrote: »
    It went in as an AVC and prsi etc was paid.

    Two more questions.

    If I increase my monthly contribution is prsi etc due on the increase (basically asking is prsi and usc paid on my current contributions also really).

    The 20 percent max I am allowed at my age, is that just my personal contribution? Or 20 including my contribution and employers contribution ?

    The 20 percent limit (age dependent), USC and PRSI apply to your contributions only, not employer contribution.

    There is also a cap in absolute terms that kicks in at high wage levels 100k plus


  • #11
    abff
    Registered Users Posts: 5,713 ✭✭✭abff


    The cut off for maximum allowable member contributions is annual income of €115,000. If you earn more than this, you can only claim tax relief on contributions of 20% (or whatever other limit applies, depending on your age) of €115,000.

    If you are in a company pension plan, employer contributions can be paid in addition to the above limit. If it’s a PRSA, company contributions count towards the limit.


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