Very favourable and attractive new Company Pension Rules were signed into law on 15th of December 2022 for PRSA’s. (PRSA means Personal Retirement Savings Account).
The Finance Act 2022 introduced significant changes to Personal Retirement Savings Accounts (PRSAs). We are happy to say these new rules will have a very positive impact for Company Directors and their spouses.
What do the new Revenue Rules mean for Company Directors?
1. Your company can transfer more money in any single year into a PRSA pension than has previously been allowed.
Up until now, if you are a Company Director, you could make pension contributions directly from your company to your company pension. The amount your company could contribute was limited by your salary, the number of years of service you have working in your business, age, and a few other variables. With the new PRSA Pension rules many of these limiting factors are gone, allowing for more company cash to be transferred into your Pension.
2. You will Pay less Tax
Your company can receive corporation tax relief all in the current year for the payments made into a PRSA pension. For example if your company was on track to make €300,000 profits by your company year-end you could transfer €300,000 of company cash into a PRSA thus reducing your profits to €0 = no corporation tax.
3. In the event of death what happens?
All of your PRSA pension can be paid to your spouse tax free. This is a very important change. For example, with a traditional Company Pension the pay out in the event of death is 4 x times salary as a tax-free lump sum to your spouse and anything above that is potentially subject to income tax.
4. A second bite of the Cherry !
A person who has already accessed their company pension can now set up a new PRSA pension, if they wish, and contribute to it up to age 75.
5. Maximum pension fund limit
The maximum pension fund limit of €2 million still applies, but it will no longer be tied to a specific salary or number of years of service.
How Can We Help?
As a result of these new rules, you may need help deciding if you should make any changes to your current pension structure. We have vast experience dealing with Business Owners, helping them to make the most of the opportunities that exist for them and their family.
Feel free to contact us Monday to Friday or email us using the contact form. Jim or Michael will be happy to answer your questions.
Email: jfenelon@arfireland.ie
Phone: 01 5267770 or 053 9110380.
Serving Dublin, East Coast, Midlands & South East
