PRSAs
Revenue Pensions Manual
24.1 Introduction
A Personal Retirement Savings Account (PRSA) is a long-term savings account to help people save for their retirement. PRSA products are approved jointly by Revenue and the Pensions Authority. Anyone may contribute to a PRSA but there is not an automatic entitlement to tax relief. The topics covered in this Chapter are:
Tax relief
Contributions by employers
PRSI and Universal Social Charge
Benefits on retirement
Death benefits
Interaction with other pension arrangements
Vested PRSAs, AMRFs and “ring-fenced” amounts
Transfers
Imputed distributions
PAYE Exclusion Orders in respect of vested PRSAs
Anti-Avoidance
Pension Adjustment Orders
Retirement benefits not taken on or before age 75
24.2 Tax relief for PRSA contributions
Tax relief for contributions by individuals is allowed against “relevant earnings’’, which means earnings from a trade, profession, office or employment (section 787B Taxes Consolidation Act 1997 (TCA)). However, an individual who is a member of an approved pension scheme or a statutory scheme (other than a scheme which is limited to the following benefits – death in service gratuity, pension to surviving spouse, civil partner, children or dependants) may, in relation to their income from the office or employment, only claim relief for additional voluntary contributions (AVCs) to a PRSA.
As with other pension products, tax relief for contributions into PRSAs is subject to two main limitations.
The first, set out in section 787E TCA, is an age-related percentage limit of an individual’s earnings in respect of the office or employment for the year for which the contributions are paid. The maximum amount of pension contributions in respect of which an individual may claim tax relief may not exceed the relevant age-related percentage of the individual’s earnings in any year of assessment.
The age-related percentage limits are:
Under 30 15%
30-39 20%
40-49 25%
50-54 30%
55-60 35%
60 or over 40%
A 30% limit applies below the age of 50 years to certain categories of professional sportspersons.1
1 Athletes, badminton players, boxers, cricketers, cyclists, footballers, golfers, jockeys, motor racing drivers, rugby players, squash players, swimmers and tennis players – section 787(8A)-(8C) and schedule 23A TCA.
Example 1
Lindsay earns a basic salary of €35,000 per annum. They will be aged 50 in 2023.
The maximum amount of pension contributions Lindsay may claim tax relief on based on their age-related percentage limit is calculated as follows:
€35,000 x 30% = €9,000 per annum.
The second limitation (in section 790A TCA) is overall cap of €115,000 on earnings that may be taken into account for tax relief purposes. This limit applies whether an individual is contributing to one or more than one pension product.
Where an individual is contributing solely to one or more PRSAs the maximum amount of tax relievable contributions is the relevant age-related percentage of the lower of:
the individual’s net relevant earnings and
the earnings limit.
Where an individual has two or more sources of income (for example, earnings from employment and profits from self-employment) and is making pension contributions to an occupational pension scheme and to a PRSA, a retirement annuity contract (RAC) and/or a Pan-European Personal Pension Product (PEPP) the single aggregate earnings limit of €115,000 applies in determining the amount of tax relievable contributions.2
Example 2
Robin is a member of an occupational pension scheme with their employer, Company X. They are aged 52 in 2022 and earn a basic salary of €50,000 per year. They are also eligible to contribute to a AVC into their employer’s pension scheme.
Robin’s maximum annual contribution available for tax relief is:
€50,000 x 30% = 15,000
Robin’s contribution to their occupational pension scheme in 2022 was 10% x €50,000 =
€5,000. This was offset for Robin through the net pay arrangement with their employer.
2 Please refer to Chapter 26 for detailed information and examples on how the age-related and earnings limits are applied in respect of contributions to one or more pension products.
Therefore, Robin can contribute up to a further €10,000 (€15,000 tax relief limit minus their normal contributions of €5,000) in AVCs and receive tax relief against their renumeration through payroll in 2022.
Where contributions are paid to a PRSA for AVC purposes, an individual must take account of any relief already granted under the net pay arrangement in respect of their main scheme contributions when calculating relief due.
Paragraph 24.7 outlines the position where PRSA contributions are made at the same time as contributions to other pension arrangements.
An individual who is not in pensionable employment is entitled to relief on contributions up to €1,525 even if the contribution exceeds the relevant age-related percentage limit (section 787E(4) TCA). This does not apply in the case of contributions to a PRSA for AVC purposes.
Where full relief cannot be given for a year of assessment for contributions paid in that year, the unrelieved amount may be carried forward to the next or succeeding years and treated as a qualifying contribution paid in subsequent years.
If a contribution is paid after the end of the year, but on or before 31 October of the following year, relief may be claimed for the previous year provided an election to do so is made by the individual on or before 31 October of the following year. Taxpayers who file and pay online via ROS or myAccount may avail of the extended return filing and payment date to make an election and pay a contribution. As the payment of a qualifying contribution is a pre-condition to the availability of relief, an election cannot be made in advance of such a payment.
The date for making an election in respect of contributions paid in the year of retirement may be extended to 31 December of that year in certain circumstances (see Appendix III of the Revenue Pensions Manual).
Full details of PRSA contributions should be included on the annual Return of Income. Employees contributing to an AVC PRSA may be given tax relief via the net pay arrangement, as is the case for AVCs to the main scheme.
Tax relief for PRSA contributions is not transferable between spouses or civil partners.
The method of calculating the respective amounts of net relevant earnings for the purposes of relief for retirement annuities under section 787 TCA and of total income for chargeable annual payments to “descendants” under section 792(2) TCA, as described in Chapter 21.3, may also be applied to PRSAs in the same circumstances.
24.3 Contributions by Employers
Prior to the passing of Finance Act 2022 on 15th December 2022, employer contributions to an employee’s PRSA were treated as a taxable Benefit- in- Kind (BIK) (section 118(5) TCA). Contributions made by an employer to an employee’s PRSA were aggregated with employee contributions for the purposes of calculating the maximum tax relieved contribution. This meant no additional tax charge applied if the combined employer and employee contribution was below the age-related percentage limit for the individual
This treatment was abolished in Finance Act 2022. Now, employer contributions to an employee’s PRSA are not aggregated with employee contributions for the purposes of calculating the maximum tax relieved contributions, and employer contributions are not subject to a BIK charge.
There is no limit on employer contributions to an employee’s PRSA. However, the overall standard fund threshold for an individual of €2m applies.
Sponsored Superannuation Scheme
A “sponsored superannuation scheme” is defined in section 783(1)(a) TCA as “a scheme or arrangement relating to service in particular offices or employments and having for its object or one of its objects the making of provisions in respect of persons’ service in those offices or employments against (i) future retirement or partial retirement”.
Where an employer is contributing to a PRSA on behalf of an employee or director, the PRSA is deemed to be an “arrangement” within the definition of a “sponsored superannuation scheme”. An employee or director in that position is therefore deemed to be in “pensionable employment”.
24.4 PRSI and Universal Social Charge
There is no relief from PRSI or the Universal Social Charge (USC) for contributions made to PRSAs.
24.5 Benefits on retirement
On the first occasion that benefits are taken from a PRSA, up to 25% of the fund may be taken as a tax-free retirement lump sum3 (section 787G(3)(a) TCA). The balance of the fund may be:
• used to purchase an annuity, or
• taken in cash (subject to income tax under Schedule E), or
• invested in an Approved Retirement Fund (ARF)4, or
• retained in the PRSA (a PRSA from which retirement benefits have commenced is referred to as a vested PRSA).
Benefits may be taken when the individual reaches age 605. There is a facility to take benefits in stages, but a retirement lump sum may only be taken on the first occasion that benefits are taken.
Benefits from a PRSA must be taken on or before age 75. Please refer to paragraph
24.14 for the treatment which applies where PRSA benefits do not commence on or before age 75.
An individual who retains the balance of a PRSA (after payment of the tax-free retirement lump sum) in the PRSA, rather than using it to purchase an annuity or transfer it into an ARF, may then draw down from that balance as and when they choose.
Subject to certain exceptions (see below), amounts drawn down from a vested PRSA are treated as emoluments and are subject to tax under Schedule E at the individual’s marginal rate. Imputed withdrawals under section 790D TCA (see paragraph 24.8 and Chapter 28) are subject to tax in the same manner as actual withdrawals.
In addition, withdrawals from a PRSA are deemed to occur when assets in a PRSA –
• cease to be PRSA assets,
• cease to be beneficially owned by the PRSA owner, or
3 See Chapter 27 for details of the extent to which retirement lump sums may be taken tax free.
4 Section 14 Finance Act 2021 removed the previous AMRF investment requirement on PRSA benefits being taken on retirement.
5 Benefits may be taken at any age, if an individual is permanently incapacitated through infirmity from carrying on their occupation (see Chapter 9). In addition, retirement from age 50 may be allowed in the case of employed contributors and of individuals whose occupation is one from which people customarily retire before age 60.
• are used in connection with any transaction that would, if they were assets of an ARF, be regarded as giving rise to a distribution from the ARF (see paragraph 23.8).
Amounts withdrawn from a PRSA in the following circumstances are not treated as taxable emoluments of the individual under section 787G TCA:
• a tax-free retirement lump sum paid when PRSA assets are first made available to the individual, which does not exceed 25% of the fund or, in the case of an AVC PRSA, the amount that may be paid by way of lump sum under section 772(3)(f) TCA;
• the transfer of PRSA assets to an ARF;
• the transfer of PRSA assets to the individual’s personal representative in accordance with section 787K(1)(c)(iii) TCA;
• where a tax-free lump sum has not been paid from a PRSA, the transfer of assets to another PRSA in the individual’s name or to an approved scheme or to a statutory scheme of which they are a member;
• an amount made available by a PRSA administrator to meet a tax charge arising on a chargeable excess arising in connection with the related PRSA (see Chapter 25);
• an amount made available from a vested PRSA (within the meaning of section 790D(1) TCA) for the purpose of:
• the reimbursement, in whole or in part, of a PRSA administrator for tax paid by that administrator on a chargeable excess relating to the PRSA owner, or
• the payment by a PRSA administrator of a non-member spouse or civil partner’s appropriate share of the tax charged on a chargeable excess, or part of it (for which the administrator is made jointly liable with the non- member) in circumstances where a benefit crystallisation event giving rise to tax occurs in respect of retirements benefits which are the subject of a pension adjustment order.
Chapter 25 covers the “limit of tax relieved pension funds” as payment of benefits in excess of the Standard Fund Threshold or Personal Fund Threshold will trigger a tax charge.
Chapter 7.4 outlines the circumstances in which the practice relating to the commutation of trivial pensions may be extended to holders of PRSAs.
24.6 Death benefits
Where an individual dies before benefits are taken, the fund passes to the estate of the deceased. There is no Income Tax charge but the normal Capital Acquisitions Tax provisions apply.
If death occurs after the drawdown of benefits has commenced, or is deemed to have commenced (see paragraph 24.13), the taxation treatment of the fund is similar to that which applies to an ARF (see Chapter 23.11) .
24.7 Interaction with other pension arrangements
As noted in paragraph 24.2, the tax relief limits apply to the aggregate of all personal contributions made by an individual to a PRSA, Retirement Annuity Contract (RAC), Pan- European Personal Pension Product (PEPP) and/or an occupational pension scheme.
Chapter 26 provides detailed information and examples on how the age-related and earnings limits are applied to contributions to one or more pension products.
An individual who is a member of a pension scheme may only get tax relief in respect of a PRSA which is linked to that scheme. A PRSA which is used as an AVC is treated in the same manner as any other AVC. The total pension and PRSA contributions must be limited to the amount required to provide maximum benefits, as set out in Chapter 6.
24.8 Vested PRSAs, AMRFs and “ring-fenced” amounts
As stated in paragraph 24.5, a PRSA owner may choose on retirement, rather than purchase an annuity or pension, the option to take the balance of their pension fund in cash (subject to income tax under Schedule E) or invest it in an ARF, detailed in Chapter 23 (the ARF options) or retain the balance of the PRSA fund in the PRSA.
AMRF requirement up to Finance Act 2021
Prior to 21 December 2021, where an individual had guaranteed annual pension income of at least €12,700 any Approved Minimum Retirement Fund (AMRF) immediately becomes an ARF and any ring-fenced amounts6 retained in vested PRSAs7 immediately become non-ring-fenced8 amounts.
6 A ring-fenced amount, “in relation to a vested PRSA, means an amount retained within the vested PRSA by the PRSA
Where an individual did not have guaranteed annual pension income of €12,700 but had originally transferred more than €63,500 to an AMRF or had retained ring-fenced amounts in vested PRSAs of more than €63,500, the excess above €63,500 immediately becomes an ARF, or as the case may be, a non-ring-fenced amount or amounts.
Finance Act 2021 removed the specified income requirement for individuals exercising an ARF option and made changes to AMRF and PRSA legislation.9 Any AMRFs immediately became ARFs on 1 January 2022.
The changes made in relation to PRSAs were –
• the removal of ring-fenced amounts in relation to a vested PRSA,
• all funds in a vested PRSA became non-ring-fenced amounts, and
• the PRSA administrator can make the amount or value of the assets in the vested PRSA available to, or pay to, the PRSA contributor or to any other person.
24.9 Transfers
Transfers may be made from one PRSA to another PRSA and from a PRSA to an occupational pension scheme.
Transfers may be made from an RAC to a PRSA. However, transfers from a PRSA to an RAC are prohibited.
Transfers from a PRSA to a PEPP are prohibited. Transfers from a PEPP to a PRSA are also prohibited.
Transfers may be made from an occupational pension scheme to a PRSA where the scheme is being wound up or the individual is changing employment.1011 See Chapter
13.2 for further details on transfer payments from an occupational pension scheme.
administrator equivalent to the amount which the PRSA administrator would, if an option had been exercised in accordance with section 787H(1) of the Principal Act [the TCA], have had to transfer to an approved minimum retirement fund in accordance with section 784C and by virtue of section 787H(3) of that Act” (section 17(6) Finance Act 2013). This requirement was removed by section 14 Finance Act 2021.
7 A vested PRSA “means a Personal Retirement Savings Account in respect of which assets have first been made available to, or paid to, the contributor by the PRSA administrator on or after 6 February 2011, and the term “vesting of a PRSA” shall be construed accordingly” (Ibid).
8 A non-ring-fenced amount, “in relation to a vested PRSA, means the amount or value of assets in the vested PRSA that the PRSA administrator can make available to, or pay to, the PRSA contributor or to any other person” (Ibid).
9 The legislative changes to PRSAs came into effect on 21 December 2021 by section 14 Finance Act 2021.
The value of AVCs may be transferred to a PRSA at any time.
Where an individual is entitled to a refund of contributions from an occupational scheme, the refund is taxed at the standard rate. However, the refund may be transferred to a PRSA without this tax charge.
Transfers to or from a “buy-out bond” are prohibited.
Only bona fide transfers are acceptable. The use of certain transfer arrangements relating to PRSAs to circumvent Revenue rules on the tax treatment of retirement benefits – for example, by transferring payments to the UK and back to Ireland – are not permissible. A PRSA contributor who directs the PRSA provider to make a payment to, or transfer assets to, an arrangement for the provision of retirement benefits outside the State (an “overseas arrangement”) under the provisions of the Occupational Pensions Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003) must, prior to any transfer, sign a declaration to the effect that the transfer conforms to the requirements of the regulations and Revenue pension rules, is for bona fide reasons and is not primarily for the purpose of circumventing pension tax legislation and Revenue rules.
24.10 Imputed distributions
For 2012 and subsequent years, section 790D TCA provides for imputed distributions for both ARFs and vested PRSAs on a composite basis. Chapter 28 provides details of this regime.12
24.11 Non-residents and vested PRSAs
PAYE Exclusion Orders
10 Section 772(3D) TCA.
11 Previously, an individual could only transfer from an occupational pension scheme to a PRSA in cases were the scheme was being wound up or the individual was changing employment if they had been a member of the scheme for 15 years or less. The requirement for the individual to have been a member of the scheme for 15 years or less was removed by Section 13 Finance Act 2021.
12 Vested PRSAs were not subject to imputed distributions for the year of assessment 2011 and prior years.
Income and assets retained in a vested PRSA are beneficially owned by the PRSA owner. Withdrawals (including deemed withdrawals) from vested PRSAs are treated and taxed as emoluments under Schedule E regardless of the residence status of the individual.
As with payments from an ARF or previously from an AMRF (see Chapter 23) Revenue does not issue PAYE exclusion orders to PRSA owners in respect of such withdrawals where the PRSA owner is not resident in the State.
PAYE Exclusion Orders are also not issued where an individual takes the balance of their PRSA as a taxable lump sum, having met the specified income requirements (see paragraph 24.8).
Interaction with Double Taxation Agreements
The treatment of ARF distributions (see Chapter 23.16) also applies from 22 December 2017 to withdrawals from vested PRSAs.
24.12 Anti-avoidance
Section 787G (4A) TCA states:
Without prejudice to the generality of subsection (4), the circumstances in which a PRSA administrator shall, for the purposes of this Chapter, be treated as making the assets of a PRSA (including a vested PRSA within the meaning of section 790D(1)) available to an individual shall include the use of those assets in connection with any transaction which would, if the assets were assets of an approved retirement fund, be regarded under section 784A as giving rise to a distribution for the purposes of that section and the amount to be regarded as made available shall be calculated in accordance with that section.
This means that linking a PRSA (including a vested PRSA) to certain transactions, including the type of arrangement which is the subject of section 784A(1B)(h) TCA, will trigger a tax charge. The transactions are the same as those which are deemed to be a distribution from an ARF which are detailed in Chapter 23.9.
24.13 Pension adjustment orders
In situations involving pension adjustment orders (PAOs), where a former spouse’s or partner‘s share of chargeable excess tax arising on a benefit crystallisation event is to be recovered from a vested PRSA which is beneficially owned by that former spouse or partner, section 787Q(5A) TCA provides that the PRSA administrator is entitled to
dispose of or appropriate such assets of the vested PRSA as are required to meet the amount of the tax due.
A disposal or appropriation of assets in a vested PRSA in these circumstances does not give rise to a charge to income tax under section 787G(1) TCA.
Chapter 25 provides additional information on PAOs and their interaction with the Standard Fund Threshold and Chargeable Excess Tax regime.
24.14 Retirement benefits not taken on or before age 75
A PRSA from which retirement benefits have not commenced on or before the date of the owner’s 75th birthday is treated as becoming a vested PRSA (within the meaning of section 790D TCA) on that date. Where the individual was aged 75 years before 25 December 2016, the PRSA is deemed to vest on 25 December 2016. A consequence of a PRSA vesting in these circumstances is that the individual cannot access the PRSA assets in any form from the date of their 75th birthday. As a transitional measure, the owner of a PRSA which was deemed to vest on 25 December 2016 (that is, where the owner was aged 75 years before that date) could, on or before 31 March 2017, take retirement benefits from the PRSA in the form of an annuity, a retirement lump sum or under the ARF options.
The vesting of a PRSA in these circumstances is a “benefit crystallisation event” for the purposes of Part 30, Chapter 2C, TCA (see Chapter 25). In addition, such vested PRSAs are subject to the imputed distribution regime (see paragraph 24.10) and the death- related provisions which apply to vested PRSAs (see paragraph 24.6).
Similar vesting provisions apply to retirement annuity contracts (RACs) – see Chapter 21, and to Pan-European Personal Pension Products (PEPPs) – see Chapter 31.
28.1 Introduction
Section 790D Taxes Consolidation Act 1997 (TCA), which applies for the year 2012 onwards, provides for a scheme of imputed distributions for both Approved Retirement Funds (ARFs) and vested Personal Retirement Savings Accounts (PRSAs) on a composite basis.1
28.2 Vested PRSAs
A vested PRSA is defined in section 790D(1) as a PRSA –
(a) from which assets of the PRSA have been made available to the PRSA owner or any other person – in general this will be in the form of benefits taken from age 60 (for example a retirement lump sum or taxed distribution) on or after 7 November 2002 (the date of introduction of PRSAs);
(b) which is a PRSA AVC, at the time benefits are taken from the main occupational pension scheme (i.e. at the point of retirement); or
(c) in respect of which the owner reaches the age of 75 years, where, up to and including the date of his or her 75th birthday, the PRSA assets have not been made available to or paid to the owner or any other person, other than in circumstances where part of the assets were transferred to another PRSA in the owner’s name.
In certain instances, the making available of PRSA assets does not constitute the vesting of the PRSA, such as:
(i) an amount transferred to an ARF2
(ii) an amount made available to a personal representative of the PRSA holder, or
(iii) the transfer, before a tax-free lump sum is taken, from one PRSA to another PRSA or pension scheme of the owner.
Where assets are in a PRSA AVC, vesting is deemed to take place at the time benefits are taken from the main occupational pension scheme (that is, at the point of retirement) because that is when AVC benefits are required to be taken.
A PRSA held by an individual who was aged 75 years before 25 December 2016 (the date on which Finance Act 2016 was passed) from which benefits had not been taken on or before the individual attained that age is deemed to become a vested PRSA on 25 December 2016.
1 Prior to 2012, the imputed distribution regime applied only to ARFs created on or after 6 April 2000 (the date the existing gross roll-up regime for ARFs was introduced). With effect from 1 January 2012, this regime was extended to certain PRSAs vested on or after 7 November 2002 (the date PRSAs were introduced) and applies to a year of assessment where the ARF and/or vested PRSA holder is aged 60 years or over for that entire year
2 This also included transfers to an Approved Retirement Fund (AMRF) prior to 1 January 2022.
28.3 Value of Assets
The value of an asset (other than cash) in a relevant fund is the market value of the asset in question within the meaning of section 548 TCA. A ‘relevant fund’ means the assets in all the ARFs and vested PRSAs beneficially owned by an individual on 30 November in a tax year.
28.4 Specified Amount
The imputed distribution for a tax year is referred to in section 790D TCA as the “specified amount” and is computed using a formula:
(A x B) – C 100
(where the amount so computed is greater than zero) and where:
A is the value of the assets in a relevant fund on 30 November for the year 2012 onwards, excluding the value of assets retained by a PRSA administrator as would be required to be transferred into an AMRF3 in accordance with an option to transfer PRSA assets to an ARF.
B is4–
where the relevant value is not greater than €2m,
a. 4, where the individual is not aged 70 years or over for the whole of the relevant tax year, or
b. 5, where the individual is aged 70 years or over for the whole of the relevant tax year.
6, where the relevant value is greater than €2m.
C is the amount or value of any relevant distributions made in the tax year.
Prior to the passing of Finance Act 2021, the reference to “the value of the assets retained by the PRSA administrator as would be required to be transferred to an AMRF” in the meaning of “A” excluded from the asset base the assets that a PRSA administrator was obliged to retain in the PRSA because the owner had not satisfied the specified income requirement or had not established an AMRF of the required amount. As the assets in the AMRF were specifically excluded from the specified amount calculation, this ensured that the retained PRSA assets were also excluded from the calculation.
The formula has the following effect:
3 Transfers to AMRFs were abolished from the passing of Finance Act 2021.
4 These rates were introduced in Finance Act 2014 and are effective from 1 January 2015. Prior to that date, where the relevant value was not greater than €2m, “B” was 5 irrespective of the age of the individual. Where the relevant value is greater than €2m, there is no change.
Fund below €2m in value; Individual aged under 70 or turning 70 in the year
Where the value of a relevant fund on the specified date is €2m or less, and the individual involved is not aged 70 years or over for the whole of the relevant tax year, the specified amount (the amount of the deemed distribution) is 4% of the value of the ARF or vested PRSA, less the value of any “relevant distribution” (that is, actual distributions from the ARF, and any associated PRSA assets made available to the PRSA owner after deducting excluded distributions in that year from the relevant fund)
Fund below €2m in value; Individual aged over 70
Where the value of a relevant fund on the specified date is €2m or less, and the individual is aged 70 years or over for the whole of the relevant tax year, the specified amount (the amount of the deemed distribution) is 5% of the value of the ARF or vested PRSA, less the value of any “relevant distribution”.
Fund over €2m in value, irrespective of the age of the individual
Where the value of the assets is greater than €2m, the specified amount is equivalent to 6% of the full value (i.e. not just on that part of the fund that exceeds
€2m) less the value of any “relevant distribution”.
Excluded distributions
As noted above, the value of excluded distributions is deducted in computing the value of relevant distributions. “Excluded distributions” are distributions that do not attract a tax liability in themselves; for example, the transfer of assets from one ARF to another beneficially owned by the same individual, or a tax-free lump sum taken from a PRSA on vesting. Excluded distributions are5:
imputed distributions themselves;
transfers between ARFs of the owner;
transactions by an ARF or PRSA that are regarded as distributions or the making available of PRSA assets;
taking a tax-free lump sum from a PRSA, transfers from a PRSA to an ARF or to the deceased owner’s estate and pre-vesting transfers to another PRSA or pension scheme of the owner; and
use of ARF or PRSA assets to discharge an excess fund tax liability or to pay the chargeable excess tax share of a former spouse or civil partner of a member of a retirement scheme, the benefits from which are the subject of a pension adjustment order. (See Pensions Manual Chapter 25, “Limit on Tax Relieved Pension Funds”, for more details)
5 Excluded distributions prior to 1 January 2022 included:
• transfers from the owner’s AMRF to a replacement AMRF; and
• transfers from a PRSA to an AMRF.
Depending on the nature of the relevant fund, the specified amount is regarded either as a distribution of that amount from an ARF or as the making available of PRSA assets of that amount to a PRSA contributor and separate taxing provisions apply as appropriate to ARF distributions (section 784A(3) and (7)(b) TCA) and to the making available of PRSA assets (section 787G(1) and (2) TCA).
For example, the specified amount of a relevant fund which consists solely of one or more ARFs or one or more vested PRSAs is regarded as a distribution from an ARF or the making available of PRSA assets respectively. Where there is a mixture of ARFs and vested PRSAs, the taxing regime depends on whether the QFM and the PRSA administrator are the same person, in which case the specified amount is regarded as a distribution from an ARF.
Where the QFM and the PRSA administrator are not the same person and the individual appoints a nominee (see paragraph 28.5), the taxing regime depends on whether the nominee is a QFM, a PRSA administrator, or both, in which case the specified amount will be considered to be a distribution from an ARF, a PRSA and an ARF, respectively.
Procedure for payment of tax on ARF distributions
The specified amount is regarded as having been distributed or made available not later than the second month of the year of assessment following the year of assessment for which the specified amount is determined, in accordance with section 790D(4) TCA.
The imputed distribution is to be regarded as a distribution made not later than February in the year of assessment following the year of assessment to which the imputed distribution relates. The QFM must deduct tax from the imputed distribution in accordance with the provisions of section 784A(3) TCA. Tax deducted must be included in the QFMs payroll submission to Revenue and the tax paid not later than 14 March of that year. For example, in respect of an imputed distribution calculated for 2019, the tax must be paid by 14 March 2020.
All payments of tax should be paid electronically through ROS or forwarded to: Office of the Revenue Commissioners
Collector-General’s Division
PO Box 354
Limerick
The remittance should be accompanied by the following statement completed by the QFM.
Approved Retirement Funds Name of QFM:
Address:
I confirm that all Approved Retirement Funds under management have been reviewed for the purposes of establishing if liability arises under Section 784A(3) TCA 1997.
Arising from this review, a sum of € is reflected in the payroll submission submitted for (month) in respect of tax deducted from (insert number) Approved Retirement Funds and is included in the remittance to the Collector General in respect of that month.
Authorised Signatory: Date:
A payment and return can be sent electronically using Revenue-On-Line (ROS). For details phone 01 738 36 99 or see the Revenue website.
28.5 Appointment of a nominee
An individual may appoint a nominee where his or her relevant fund comprises ARFs and/or PRSAs that are not all managed or administered by the same QFM or PRSA administrator.
The appointment of a nominee is optional where the relevant fund has a value of
€2m or less. If no nominee is appointed, each QFM and PRSA administrator must operate in isolation and apply the 5% notional distribution to the relevant ARF(s) or PRSA(s) they manage/administer. Please refer to paragraph 28.8 where an individual opts not to appoint a nominee.
The appointment of a nominee is compulsory where the relevant fund has a value greater than €2m. This is because in such cases the QFM or PRSA administrator will not have sufficient information to operate in isolation; unless the ARF/PRSA that they manage is itself greater than €2m the QFM or PRSA administrator won’t know whether to apply the 4%, 5% or 6% rate.
An individual who appoints a nominee must advise the other QFMs and/or PRSA administrators of that fact and provide them with the name and contact details of the nominee.
Where the appointment of a nominee is compulsory the individual must advise the other manager/managers that the appointment of the nominee is a compulsory appointment and that the reason for the appointment is that the aggregate value of the assets in the ARFs/PRSAs is greater than €2m and therefore attracts the 6% rate of tax.
28.6 Provision of certificate(s) to nominee
Where a nominee is appointed for any year, the other manager(s)/administrator(s) must provide the nominee with a certificate for that year stating the aggregate value of the assets in, and relevant distributions from, the ARFs/PRSAs they manage within 14 days of the specified date (that is, by 14 December of a tax year).
In the case of a PRSA fund, the certificates should exclude any amount that had been retained by the PRSA administrator for AMRF purposes prior to 1 January 2022 (see paragraph 28.4), as these do not form part of the asset base for the specified amount.
The nominee must retain these certificates for six years for production to Revenue, if required.
A nominee who receives a certificate or certificates from the other manager(s) must determine the specified amount (see paragraph 28.4) as if the value of the assets and the relevant distributions stated in each certificate so received were the value of assets in, and relevant distributions from, an ARF or a vested PRSA managed or administered by the nominee. This applies even if the nominee only gets some but not all the required certificates (see paragraph 28.7).
28.7 Nominee receives some or no certificates
Where the relevant fund value is €2m or less and the nominee receives no certificates from the other fund manager(s), the nominee and the other manager(s) must determine in isolation the specified amount in respect of the ARFs/PRSAs that they manage, that is, as if the individual’s relevant fund comprised solely of the ARFs/PRSAs that each manages.
Where the relevant fund value is €2m or less and the nominee has received certificates from some but not all of the other fund manager(s), the managers that failed to provide certificates must determine in isolation the specified amount as described in the preceding paragraph. As the nominee will have received at least one or more certificates from the compliant manager(s) the nominee must calculate the specified amount in accordance with section 790D (8) TCA in respect of the nominee and the other managers that provided certificates (see paragraph 28.6).
These provisions also apply where the relevant fund value is greater than €2m except that any specified amount calculated in isolation is to be based on 6% of the value of the fund.
28.8 Nominee not appointed
Where an individual whose relevant fund comprises ARFs and/or PRSAs that are not managed or administered by the same QFM and/or PRSA administrator, opts not to appoint a nominee because the value of the assets in the relevant fund does not exceed €2m, each QFM and/or PRSA administrator must determine in isolation the
specified amount in respect of the ARFs/PRSAs that they each manage as if the individual’s relevant fund comprised solely of those ARFs/PRSAs that each manage.
28.9 PAYE Exclusion Orders in respect of ARFs and PRSAs
Revenue does not issue PAYE Exclusion Orders in respect of distributions or withdrawals from ARFs and PRSAs (whether actual or imputed). Please refer to Pensions Manual paragraphs 23.15 and 24.10, respectively.