Mary Fitzpatrick • 13 Dec 2018
31st December 2018 – An important date for company owners!
95% of all limited companies in Ireland operate their financial year like the calendar year therefore having a business year-end date of 31st December. An important aspect of planning for the future can be to identify funds in your business that may be surplus to what you currently need to finance your business today and to move these funds out of the business.
A company or executive pension plan allows you the flexibility to make contributions how and when you want to. You can set up your plan whereby contributions can be made monthly, quarterly, half-yearly or yearly. You also have the flexibility to top up your plan before your company year-end by making a single premium payment to the plan from the company balance sheet.
What happens at retirement?
You can chose to take your retirement benefits under your company pension plan at any age from 60-70 which is the normal retirement age. It is possible to take benefits at your chosen retirement age and to continue working in There is nothing quite like a deadline to get something done! Whilst most people associate the 31st October each year as an important date (and it is!) if you’re a company owner with a financial year-end date of 31st December 2018 - you need to take note!
the same company. It is also possible to change your chosen retirement age at any stage in the future.
You may also be able to take your benefits from age 50 under certain circumstances. In the event of ill health, benefits can become payable immediately (regardless of age) but this is subject to a medical to make sure you qualify under Revenue rules. If you decide to retire early you will need to surrender your shareholding and sever all links with the business.
When you do retire you can chose to use your retirement fund in either of 2 ways;
A tax-free lump sum of up to 1.5 times final salary together with a reduced annual pension payable for the rest of your life
A tax-free lump sum of 25% of the fund with the balance of the fund either taxable, or invested in an approved retirement fund and/or approved minimum retirement fund.
While pension provision might not be an urgent issue, it is an important one and using tax efficient structures that are available to company owners makes acting now important. In the future we expect retirement to change and become much more flexible. Instead of just stopping all work at retirement age people are likely to keep working in some capacity as long as they can and then perhaps slow down. As more lifestyle opportunities become cheaper as a result of the internet life choices in later life will also change.
If you are a business owner and your business year-end date is 31st December 2018 we at CMCC Financial Solutions Limited can help you in 2 ways -
(1) Reduce your corporation tax bill and
(2) Set up a structure to move money from the company balance sheet to your name in a tax efficient manner.
If you decide to set up an executive pension plan it is important to ensure your pension contributions are invested in funds with the potential for growth whilst taking account of your attitude to investment risk. We at CMCC Financial Solutions work with all pension providers in Ireland and have access to a vast array of global and domestic investment funds for you to invest in. We can offer advice on how investment funds are performing and what funds best suit your attitude to investment risk.
Contact us here in Sandyford on 01 6532260 or at email@example.com to make an appointment in order to establish how important the 31st December 2018 could be to you and your company.