Can I Take A Lump Sum From My Pension Tax Free?
You can usually take up to 25% of your pension fund as a lump sum, of which the first €200,000 is tax free.
For example, if you had a pension fund valued at €500,000 then your lump sum would be 25% of €500,000 = €125,000. As the €125,000 lump sum is under the €200,00 limit this means the full €125,000 lump sum is paid tax free.
If your lump sum however was over €200,000 then any amount over €200,000 is taxed at 20%. This is a total lifetime limit even if lump sums are taken at different times and from different pension arrangements.
The timing of when you can do this is directly related to the type of pension you have and your age. In most cases the lump sum cannot be accessed until age 60 but there are some limited circumstances when you can access your pension lump sum from age 50. For example, if your pension relates to a period of previous employment, and you are no longer employed by that company, then you may be able to access your pension lump sum at age 50.
If you have questions, please feel free to contact me using the contact details listed below.
Michael Coburn BBS, QFA, FLIA, LCOI, RPA, SIA
Dublin: 01 5267770
Wexford: 053 9110380
COMPLIANCE & FINANCIAL MANAGER
Michael has been providing tax, investment and lifetime financial planning advice to clients since 2005. He has an in-depth understanding of Business Owners and their requirements, which allows him to guide his clients through the complex world of long-term financial planning.
I have recently been diagnosed with Parkison disease. I’m only 47. I have an Irish life pension bond. Would I be able to withdraw it.?
Hi Gillian, Typically, age 50 is the earliest age of access. You will also need to get clarification from Irish Life on this. We will also respond to you directly by email.
Is it possible to sell a pension fund before retirement age. I understand that this would be a taxable event.
Hi John, It is not possible to sell your pension fund, however it maybe possible to access the pension fund before normal retirement age under certain circumstances.
I currently have all our pension fund in a Zurich Prisma2 fund. I am 59 years of age, planning to retire at 62. Is this too conservative, thanks, Eamonn
Thanks for your question and for getting in touch. Michael has emailed you directly with 2 questions, which will allow him to respond to your situation. We look forward to hearing from you soon.