Imperius Wealth

PRSA – The Most Tax Effective Pension Solutions for Business Owners

PRSA – The Most Tax Effective Pension Solutions for Business Owners

PRSA – The Most Tax Effective Pension Solutions for Business Owners

Are you a business owner looking to reduce your corporate tax bill?
A PRSA is the best solution for you.

Advantages of PRSA

  • For Business owners of established companies and their spouses, a PRSA pension is the most flexible and tax efficient pension in the Irish market.
  • It permits the Business owner to invest up to €2M per individual over time, allowing the owner to invest a similar sum for their spouse, this provides the potential to transfer €4M to a PRSA in their own names (if company reserves permit).
  • The Business receives immediate tax relief in the year the contribution is made.
  • There is no tax or BIK due on an Employer contribution.
  • The main eligibility requirement is that the business owner and his spouse are currently in receipt of a Salary from that business.
  • The PRSA pension could also fund a ‘Buy-to-Let’ property purchase in Ireland- which is another tax efficient structure – as Rental Income is not taxable within the Pension structure.
  • The PRSA owner can access the PRSA pension from Age 50 onwards (must sever links with company) or from Age 60 (no need to sever links).
  • At retirement, the PRSA owner can access 25% of the PRSA tax free, with the remaining 75% available to drawdown over time, if an ARF is chosen, a minimum of 4-5% p.a. is suggested.
  • A Business owner at retirement that has accumulated a fund up to the €2M {Standard Fund Threshold), he/she can receive 25% of a lump sum, i.e. €500k, on which they will only pay €60k tax. net proceeds are €440k.
  • A 20% Director of an Investment company cannot contribute to an Occupational or an Executive Pension, however where that 20% Director is an employee of that company the Pension rules allow an Employer contribution to that Director’s PRSA.
  • Unlike an Occupational Pension or an Executive Pension, PRSA’s allow pension benefits to be drawdown using multiple PRSA’s, i.e. an individual could have five separate PRSA’s of €200k each and can decide when he/she wants to access each of these separate pots. This can be beneficial for tax planning.

Who is eligible to invest in a PRSA?

A limited company business owner, a partnership, or a sole trader.

How can I speak to someone about my options?

Should you have any questions on this, or any other aspects relating to ‘Tax effective Pension Solutions for Business Owners’, please get in touch to arrange a consultation with one of our financial experts here at Imperius Wealth.
Andrew Cree

Andrew Cree

Senior Financial Planner


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