Dáil Éireann Debate, Tuesday - 3 November 2015
316. Deputy Michael McGrath asked the Minister for Finance the maximum amount that a person can withdraw per year from an approved minimum retirement fund before reaching the age of 75; his plans to change this maximum percentage; if the amount drawn down annually is subject to income tax, the USC and PRSI; and if he will make a statement on the matter. [37899/15]
View answerWith effect from 2015, the maximum amount that the beneficial owner of an Approved Minimum Retirement Fund (AMRF) can draw down annually, up to the age of 75, is 4% of the value of the fund.
The maximum 4% drawdown was introduced by Finance Act 2014 and gives an AMRF owner the discretion to access up to 4% of the assets of the fund on one occasion in each year, instead of the facility to draw-down the accrued income and gains of such funds, as had applied previously.
I have no plans to change the AMRF drawdown arrangements at this time. I should say, of course, that an AMRF owner can use some or all of the funds in his or her AMRF at any time to purchase a pension annuity.
On the question of the taxation of AMRF drawdowns, I am advised by the Revenue Commissioners that a Qualifying Fund Manager (QFM) who manages an AMRF is required under section 784A of the Taxes Consolidation Act 1997 (as applied by section 784C (7) of that Act), to treat a withdrawal from the fund as a payment of emoluments in the year in which the payment is made and to subject that payment to income tax under the PAYE system. The fund manager is obliged to deduct tax at the higher rate of income tax for the year in which the payment arises unless Revenue has issued a certificate of tax credits and standard rate cut-off point for the individual prior to the payment being made. PRSI (up to age 66) and USC would also be payable on any payments, as appropriate.
I am further advised by the Commissioners that an individual planning to drawdown AMRF funds should apply to his or her local Revenue Office for a certificate of tax credits and standard rate cut-off point in advance of withdrawing the moneys as this will ensure that any such withdrawal is taxed at the individual's appropriate marginal rate of tax.
Finally, I am advised that in the event that tax is charged in the first instance at the higher rate (in the absence of a tax credit certificate) in circumstances where the standard rate applies to some or all of the AMRF payment, a taxpayer can apply to Revenue for a repayment of any tax overpaid after the end of the tax year in question.
