How much can I investment into my pension?
Even a small investment into a pension can make a big impact!
Tax saving investment opportunities for employees.
If you are an employee who feels you are paying too much tax, the good news is that you may be entitled to a refund of some of the Income Tax you paid in 2019.
This can be achieved by personally making a lump sum personal pension plan, PRSA AVC or PRSA AVC contribution by 31 October 2020, and electing to backdate the tax relief to 2019.
If you use the Revenue Online Service (ROS) to both file your tax returns and pay your taxes you have until 10 December 2020 (Covid-19 extension) to file and pay for 2019. Investment amounts are subject to the age-related limits (please see above)
1. An earnings cap of EUR 115,000 applies to contributions. Pension contributions made by you in 2019 must be deducted from the maximum tax-allowable contribution calculated based on these limits.
Notes:
2. Age is age on your birthday in 2019.
3. Retirement benefits are subject to separate Revenue limits.
4. Reference throughout this document to ‘Tax’ refers to ‘Income Tax’.
Example
Jane is a 35 year old employee who paid Income Tax at the 40% rate in 2019. She makes a pension contribution of EUR 10,000 by 31 October 2020 and informs her local tax office by 31 October 2020 that she wishes to backdate relief on this to 2019. She is entitled to the following refund:
If 40% Taxpayer and makes a Gross Pension Contribution EUR 10,000 the Tax Refund is EUR 4,000. Net Outlay EUR 6,000Note: For employees who paid Income Tax at the 20% rate in 2019, the refund of Income Tax will be EUR 200 for every EUR 1,000 contributed to a pension plan.
Important! Tax refunds are claimed by the individual informing his/her tax district by 31 October 2020 that the tax relief on the contribution paid by this date is to be backdated to 2019. Note: If you use the Revenue Online Service (ROS) to both file your tax returns and pay your taxes you have until 10 December 2020 (Covid-19 extension) to file and pay for 2019.
What type of pension plan?
- If you are an employee in non-pensionable employment, you can make contributions to a Personal Pension plan or a PRSA plan.
- If you are an employee in pensionable employment, you can make contributions to a Group Additional Voluntary Contribution (AVC) arrangement or to a PRSA AVC plan.
Note: Pensionable employment is where you are a member of an occupational or statutory pension scheme. You are not in pensionable employment where your employer is contributing to a PRSA arrangement on your behalf.
We are available to discuss your options, and we look forward to hearing from you.
telephone | 091441188 and/or email | office@nelsonlife.ie
RETIREMENT & PENSIONS | INVESTMENTS | LIFE INSURANCE | FINANCIAL PLANNING
Nelson Life Limited trading as Nelson Life is regulated by the Central Bank of Ireland.
WARNING: Past performance is not a reliable guide to future performance. WARNING: The value of your investment may go down as well as up. WARNING: You may lose some or all of the money you invest. WARNING: These funds may be affected by changes in currency exchange rates. WARNING: If you invest into this product you will have access until you retire (Pension Products). WARNING: The above content does not constitute investment advice, as it does not take into account the investment objectives, knowledge and experience of financial situation of any particular person. Prospective investors are advised to make their own assessment of the information contained herein and to obtain professional advice suitable to their own individual circumstances. WARNING: The information contained in this document is based on our understanding of current tax legislation and the current Revenue Commissioners interpretation thereof and is subject to change including retrospectively without notice. This is intended as a general guide only and is not a substitute for professional tax, legal and investment advice.