Tax Tip: Pension Planning

Use your company to fund a pension for the shareholder directors.

The company can get tax relief on the contribution and the recipient can take a tax free lump sum of up to €200,000 and a low rate (20%) lump sum of up to €300,000 from the pension.

An employer can fund pension benefits for its employees sufficient to fund up to 2/3rds of an employee’s remuneration where the employee has 20 years of service. The level of pension contributions that an employer can make to a pension fund is significantly higher than the tax deductible contributions that an employee can make.

Funding for the correct level of pension benefits is highly tax-efficient. But be aware that funding pension benefits beyond a certain level can become tax-inefficient.

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Joe McAvoy

Director

Tax Services

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Dara Burke

Director

Tax Services

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Shane Carroll

Director

Business Advisory

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