We all want to ensure that we will be able to live comfortably in retirement.
Basically this means we need to have built up a fund when we stop working which will be sufficient to provide us with an income which will supplement state pensions.
One of the best ways to achieve this objective is to leverage the tax benefits associated with revenue approved retirement plans to help build up a worthwhile fund at retirement.
There are four key tax advantages, namely:
• Contributions (within certain limits) can be offset against corporation tax and/or personal income tax.
• Monies are allowed to accumulate tax free – i.e. they are exempt from income and capital gains tax. This means savings accumulate faster and the effect of compound interest is very significant.
• Contributions paid by the company for an individual, including the owner/director are not assessed to benefit-in-kind.
• At the time of retirement 25% of the fund can be taken as a lump sum (up to an overall maximum of €500,000). The first €200,000 is free from tax – the balance only suffers tax at 20%. (Under current revenue rules).
It is important to set down what you would like to achieve when embarking on a savings plan for retirement and to regularly review progress towards your objective.
Impartial trusted advice is vital.
Take a look at our video below, where Joe explains Inverdea’s retirement planning services.