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If so, here is something really important you need to know about changes to the PRSA legislation.
No Benefit-In-Kind Implications
Firstly, employers can now contribute to a PRSA for their employees or directors without incurring BIK implications.
No Contribution Limitations
Contribution limitations are no longer tied to salary or service.
Retire Your PRSA At Age 60, While Continuing Employment
PRSAs now provide enhanced flexibility for company owners, allowing them to retire their PRSA at age 60 with a 25% tax-free lump sum, while continuing their employment in the company. No need to leave the company or sell any shareholdings. Your company can continue to fund your pension with a second PRSA, after your 60th birthday.
PRSAs Offer The Flexibility Of Phased Retirement
Through the use of multiple PRSA policies, a company owner can choose a phased retirement.
In Summary the key PRSA advantages are:
| PRSA from 1 January 2023 | |
|---|---|
| Funding Limits | No limit for employer contributions to a PRSA, up to €2million. |
| Death in Service | Full PRSA value payable as lump sum to your estate. |
| Tax Relief | All employer contributions will receive immediate tax relief in the year they are paid. |
| Take money off the table in the form of a 25% tax-free lump sum and continue funding your pension after 60yrs | With a PRSA, you can retire on your 60th birthday, continue employment in your company, with no requirements to relinquish your shareholdings. |
Given these benefits, I would recommend exploring your options to transfer your Executive Pension to a PRSA. Legislative changes can happen unexpectedly, potentially hindering your ability to access such benefits including that of the 25% tax-free lump sum on your 60th birthday.
To investigate this further and to ensure your retirement planning aligns with these changes, please contact me to discuss.
Your financial future is our priority.