Fergal Roche Financial Planning Manager
28th November, 2024
Preparing for your retirement by investing in a pension over the long term and contributing to it regularly remains one of the most tax-efficient ways to build an asset base which can help support your lifestyle in retirement. Finance Act 2022 introduced changes that created opportunities for pension savers to make larger tax-free company contributions to Personal Retirement Savings Accounts (PRSAs). However, changes announced in Finance Act 2024, coming into effect on 1st January 2025, will eliminate this opportunity. As a result, there is a limited window from now until the end of December to avail of the existing funding opportunities.
PRSA funding has been a hot topic of conversation in the Dáil and media in recent months which resulted in the ultimate removal of the ability to make large company contributions into a PRSA, effective from 1st January 2025. There continues to be a window of opportunity until year-end for business owners or directors who, previously, may have been limited in terms of the company contributions they could make to their pension schemes.
If you have excess cash in your company, now may be a good time to review your retirement plan given the opportunity as it currently exists will come to an end on 31st December 2024.
Advance consideration should be given to the company’s cashflow situation and to the long-term plans for the business, as once cash has been transferred to your pension it cannot be reversed.
There are also other important considerations such as the maximum tax-efficient pension fund of €2 million and the deductibility of the contribution for the company.
At Davy, our team of pension and tax specialists can assess your options with you as well as your tax adviser. Our personalised planning-lead approach ensures you make the decisions that are right for you, in the context of your wider business and personal circumstances.
If you’re an existing Davy client, please contact your adviser to find out more. If you’re new to Davy, why not book a consultation today?
If you are a business owner or company director and would like to learn more about pension savings opportunities.
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Warning: The value of your investments may go down as well as up.
Warning: Tax information discussed in this article is provided for Irish Resident investors only by way of general guidance only and is neither exhaustive nor definitive and is subject to change without notice, including potentially retrospectively. It is based on Davy’s understanding of Irish Tax legislation, provided by Revenue as at July 2024. It is not a substitute for professional tax advice. Please note that Davy does not provide tax advice. You should consult your own tax advisor about the rules that apply in your individual circumstances.
Warning: The information in this article is not a recommendation or investment research. It does not purport to be financial advice and does not take into account the investment objectives, knowledge and experience or financial situation of any particular person. There is no guarantee that a financial or investment plan will meet its objectives. You should speak to your advisor, in the context of your own personal circumstances, prior to making any financial or investment decision.
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