SIPPs .Couple of points for clarification, please.
gibbo9
Posts: 44 Forumite
Thanks for information given re SIPPS previously. We put 5K into one for my wife who will be 55 in October this year. I explained in previous thread that she has now finished work and will be a non tax payer for the next few years and she will wish to continue contributing the £2880pa to take advantage of the tax relief.
I will have 2 DB pensions, 1 NHS giving an automatic lump sum of approx 11k and a Lloyds Bank one which does not give automatic lump sum but on which I will elect to take approx £40k.
My wife will not be drawing her pensions till 60/65.
Can this years £5k be used year on year to make future contributions, i.e. withdrawn and paid in again without breaking any rules?
Regarding my lump sums, would these fall within the rules re recycling should it be considered we were using this to fund future contributions to the SIPP rather than existing savings? Are both added together or treated separately, or disregarded as one is automatic and one by choice?
I think what I have read suggests this/these would be the case(s) but if someone could just confirm it I would be grateful. We do tend to worry in case we get things wrong. Many thanks in advance.
I will have 2 DB pensions, 1 NHS giving an automatic lump sum of approx 11k and a Lloyds Bank one which does not give automatic lump sum but on which I will elect to take approx £40k.
My wife will not be drawing her pensions till 60/65.
Can this years £5k be used year on year to make future contributions, i.e. withdrawn and paid in again without breaking any rules?
Regarding my lump sums, would these fall within the rules re recycling should it be considered we were using this to fund future contributions to the SIPP rather than existing savings? Are both added together or treated separately, or disregarded as one is automatic and one by choice?
I think what I have read suggests this/these would be the case(s) but if someone could just confirm it I would be grateful. We do tend to worry in case we get things wrong. Many thanks in advance.
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Comments
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Whose to say where the £2880 comes from, as long as she has more than that in savings, did it come from that or the £5k? Id say teh savings, obviously.
In any case the rules are that if the sums used are below £7500 you dont hit pension recycling issues and your wife wont be receiving the TFLS will she, it will be you, and you each have your own allowance. You couldn't put in to yours. She can put in to hers. If you choose to give her money, thats your affair.0 -
Can this years £5k be used year on year to make future contributions, i.e. withdrawn and paid in again without breaking any rules?
My inexpert understanding is this:
Anyone of whatever age can pay whatever amount they like into a pension scheme, but there may be penalties and, crucially, no tax relief unless the payment falls within strict limits.
Above the age of 75, you can get no tax relief/tax credit for any payment into your pension plan.
Up to 75, anyone can pay in up to £2880 per year into a pension plan and receive a tax credit into your pension plan of up to £720. You can pay in more than £2880 up to a maximum of your earned income to get further tax relief; if you're already retired and have no earned income (pensions are not earned income), then the limit for your annual contributions to get the tax credit will be £2880.0 -
Thanks for that, perhaps we can stop worrying now and enjoy retiring instead0
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Ali finished last week and had the last lunch (free) with work today, and I'm just coming to the end of 2 weeks annual leave to use it up then 3 days to work next week and that's me done too. Don't think it will be too onerous and looking forward to a new way of life0
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My last day is today (one week of leave to be taken to the end of the month) after 39 years of working. Retiring early at 56
Its all a little sureal but I know I am ready to leave!
Jerry0 -
Stop making me jealous! As of today I have 11 pay days left....... (ie best part of 1 year)0
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OldMusicGuy wrote: »Stop making me jealous! As of today I have 11 pay days left....... (ie best part of 1 year)
Allow me to cheer you up. As long as you've taken care of pensions you continue to have paydays - but you no longer have to account for your time :beer:The questions that get the best answers are the questions that give most detail....0 -
You are aware she can contribute upto to the total this tax years earned income, should she have the cash and inclination?0
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Thanks, the inclination is there but the cash is elsewhere. Were happy with the recycling situation as explained but just for interest is there any difference in the treatment of the 2 lump sums ie 1 automatic and the other elective?0
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