There was a recent change to the Personal Retirement Savings Accounts (PRSA’s) in the Finance Act 2022. The changes have made the PRSA’s more flexible and attractive for business owners for their retirement planning and business exit strategy.
The changes are as follows:
- An employer Contribution to a PRSA is now exempt from BIK
- Employer PRSA contributions are no longer included in the maximum pension contributions for which employees can claim tax relief
- For a company, tax relief on all employer contributions is allowed in the chargeable period the contributions are paid
Opportunities for Business Owners:
- With no restriction on the level of employer PRSA contributions, business owners can extract wealth from their companies more tax efficiently, by having more control over their pension funding
- If you have a spouse or family member employed in your company, they are also entitled to a maximum tax efficient pension fund of €2m also
- With a PRSA, you can access your pension benefits between 50 and 60, but you have to terminate employment with the company. However, you are now not required to dispose of any shareholding or terminate links to the business if you are a company director
- By splitting your pension benefits across multiple PRSA’s you can mature these contracts in stages up to age 75, thereby allowing you to phase your retirement and give you more control on how you take your benefits
We hope you find the above informative and useful for 2023. We will continue to update you on any changes in tax legislation or from Revenue guidance throughout the year.
If you have any queries, feel free to contact us anytime.
Emilie, Joe, Enda and all the Team!
Keogh Accountancy Group