An Executive, or Directors PRSA, can prove the best choice for many limited company owners since the Finance Bill 2022 which resulted in the removal of benefit-in-kind (BIK) restrictions on company paid contributions, but also salary and service related funding limits.
An company owner can now contribute as much as they want into there own PRSA, once the total pension fund accumulated (form all Irish pension sources) remains under the €2.15 million retirement fund threshold.
This wealth extraction option is particularly attractive to Business Owners, who draw a modest salary, but have built up cash reserves in the company.
As an impartial pensions broker, we compare the market for the best, low-cost pension plans and provide the broadest range of investment fund
options, with access to over 23 separate fund managers.
Our pension planning advice process includes impact and investment risk tolerance assessment, based on your own personal preference.
But, what makes us stand out, is that we offer multi-asset diversification, with a choice of both passive and active management and with a mix of fund manager strategies.
A company may make whatever contributions are necessary to build up a pension fund subject to a maximum fund value of €2.15m (for allowable tax-relief).
Come retirement age, when you’re ready to take your benefits, your options are to take a tax-free lump sum and buy an annuity, or to reinvest the balance in an approved retirement fund, known as an ARF and make income withdrawals from that.
People who choose not to access their PRSA benefits come age 75, will see it automatically vest.
You can draw a tax-free lump sum of up to 25% of your PRSA pension pot. A limit of €500,000 applies to the tax-free lump, with the first €200,000 is tax-free and the balance up to €500,000 is taxed at 20%.
An annuity pays a retirement income for the rest of your life in exchange for the balance of your pension pot at retirement.
An ARF allows you to retain your pension pot at retirement, subject to minimum withdrawals, and can be passed on to your family on death.
Questions & Answers
Your company funded PRSA questions answered.
An Executive PRSA offers a highly tax-efficient way of extracting cash for your own benefit, or for that of company executives from a limited company.
Its particularly suited to the owners of limited companies, who have cash surplus in the company bank account, but may be restricted by Revenue funding limits set under a Master Trust – Executive Pension Plan.
For new plans a PRSA often carries lower charges to an EPP and should have equivalent fund choice provided it is a non-standard PRSA contract.
We work with all leading PRSA providers in the Irish market, e.g. Zurich, New Ireland, Aviva, Irish Life, Standard Life etc, and enjoy access to over 23 separate fund managers.
An AMC, which typically amounts to 1.25% PA, with 100% allocation on all regular and lump sum contributions. This covers set-up and our long-term investment advice and administration support.
Working with us means that you pay:
No a PRSA is held in your own name, so does not require a Trustee appointment.
An Executive PRSA provides full tax relief on contributions, as well as tax-free growth, and a tax-free lump sum come retirement.
1. Company-funded Executive PRSAs effectively receive 52% PAYE relief, plus corporation tax relief against firstname.lastname@example.org%
2.There is no DIRT or capital gains tax on investment growth.
3. Up to 25% of your eventual PSRA retirement pot can be taken as cash, with the first €200,000 completely tax free.
Employers can pay regular or single contributions to their executive PRSA.
An Executive PRSA can also accept transfers from other Executive pensions as well as previous group schemes – these would usually be paid as electronic fund transfers from other institutions.
Employers can pay a single contribution at any time, which can be done instead of, or as well as, paying regular monthly or annual contributions.
Senior employees and non-executive directors can make regular contributions on the same basis as their employer with the combined contributions payable through company payroll. They can also make one-off lump sum payments within Revenue Limits via EFT.
Yes, all private pension holders are still entitled to the State pension in addition.
If you die prior to retirement, your full Executive PRSA value is payable as lump sum to estate. There is no requirement to transfer any part of the funds to an ARF and there is no inheritance tax liability between spouses.
Under an Executive PRSA, you can now draw your pension plan benefits from age 50, however, if you have to stop working due to serious ill-health, you can take your pension benefits earlier.
We grant 24/7 online access to your PRSA account and will also receive annual benefits statement through the post, together with a one to one review.
You can contribute and then draw down your retirement benefits from your PRSA up to age 75.
Where a PRSA holder has not commenced taking retirement benefits and has reached their 75th birthday, Revenue will treat the PRSA as vested and at that point the benefits can no longer be accessed by the PRSA holder.
A vested PRSA is treated for tax purposes as the equivalent of an ARF. This means that an imputed distribution of 4% pa will apply to the PRSA and those that hold ARFs and vested PRSAs with a combined value in excess of €2m will pay an imputed distribution of 6% pa. On death, the vested PRSA will be treated in an identical manner to an ARF as it will form part of a deceased’s estate.
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