Attention, all you approaching 75 year olds…

The 30-day countdown clock is ticking
Finance Act 2016 – Important changes to PRSAs and RACs at age 75
I can advise that the Finance Act 2016 was signed by the President on 25 December 2016.
This means that the 30-day countdown clock has already started ticking for any policyholders who were over 75 on 25 December. As of today, there are only 18 days left to return the completed Pension Claim form/BCE Declaration to avoid a 40% Chargeable Excess Tax. Further details are below…
The Finance Bill 2016 has made fundamental changes to the treatment of PRSAs (Personal Retirement Savings Accounts) and RACs (Retirement Annuity Contracts/Personal Pensions) where the client passes, or has already passed, their 75th birthday.
Severe Consequences – NOW UPDATED
For such customers, if action is not taken immediately the consequences are severe:
1. Where a customer is currently age 75 or over there will be an automatic Benefit Crystalisation Event (BCE). This occurred on the date of passing of the Finance Act 2016, which was 25 December 2016.
2. For any clients turning 75 after 25 December 2016, if his or her RAC/PRSA has not been matured before then, then the BCE will occur on their 75th birthday.
The key implication of this is that:
• If the customer does not provide a BCE Declaration within 30 days (of the BCE date) then their whole fund will be deemed to be a Chargeable Excess and will be taxed at 40%.
• RAC’s and PRSA’s (including Vested-PRSA’s) will go into “lockdown” – in other words, customers will have no further access to their assets.
• Once the RAC or PRSA has gone into lockdown, it will not be possible to access the 25% Retirement Lump Sum or transfer to an ARF.
• Vested-PRSA’s (but not Vested-RAC’s) will be subject to tax on Imputed Distributions. The Tax will continue to be deducted from the Vested-PRSA fund, even though it is not possible for the Imputed Distribution to be deducted from the fund and paid to the client.
• The tax status on death of the PRSA and RAC will change on the date of passing of the Act to that of an ARF.
You urgently need to act if this applies to you!
As the consequences of NOT DOING ANYTHING are very severe.
The message for any individual over the age of 75 is very clear – They need to submit their BCE Declaration Form by Tuesday 24 January 2017 at the very latest. They also need to convert (from a PRSA, Vested-PRSA and RAC) to an ARF/Annuity or take as taxable cash by 31 March 2017.
For individuals under 75, the message is to mature their PRSA or RAC before their 75th birthday and transfer to an ARF, Annuity or take as taxable cash (and an AMRF if required before 75).
Get in touch with us today if you would like to reserve your free Discovery Meeting consultation
Should you have any queries on this communication or the maturity process of your pension, then please contact Paul at Lifestyle Financial Planners on 086-8053755 or 096-75951

error: Content is protected !!