Paying £2880 into pension when retired

busybee100

Ok, so is it small pot rules only apply to defined benefit and contribution pensions? Small pots can be taken 100% lump sum but are still classed as income? Or both?

drumtochty

UKDW,


Just to check your logic, do you have enough room in your personal allowance in both these years to take the taxable amounts of the SIPP without paying 20% tax. Aug 2019 £4,200 and July 2020 £3,670.

AlanP_2

busybee100 wrote: »

Ok, so is it small pot rules only apply to defined benefit and contribution pensions? Small pots can be taken 100% lump sum but are still classed as income? Or both?

Any income taken that is above the 25% tax free lump sum level will be liable for tax whether from 1 DC pot or 3.

The small pots rule means that taking taxable income (from a DC small pot) doesn't trigger the reduction in one of the annual pension contribution limits (from £40k down to £10k).

Google Money Purchase Annual Allowance (MPAA) for full details.

ukdw

drumtochty wrote: »

UKDW,


Just to check your logic, do you have enough room in your personal allowance in both these years to take the taxable amounts of the SIPP without paying 20% tax. Aug 2019 £4,200 and July 2020 £3,670.

Yes thanks until state pension age, would then have to leave a bit more than £1k in once reaching SPA to avoid going over the tax free allowance.

busybee100

AlanP wrote: »

Any income taken that is above the 25% tax free lump sum level will be liable for tax whether from 1 DC pot or 3.

The small pots rule means that taking taxable income (from a DC small pot) doesn't trigger the reduction in one of the annual pension contribution limits (from £40k down to £10k).

Google Money Purchase Annual Allowance (MPAA) for full details.

Thank you. I think I've got it now, the reduction in contributions is not going to be a problem.

Snowbelle

I'm a little confused regarding keeping £1000 balance in order to keep the account open with HL. Is this kept in the SIPP or in the drawdown account? Any help appreciated.

skycatcher

Snowbelle wrote: »

I'm a little confused regarding keeping £1000 balance in order to keep the account open with HL. Is this kept in the SIPP or in the drawdown account? Any help appreciated.

It needs to be kept in the drawdown. They will close the SIPP but it can be reopened if you want to put more in next year with a phone call.

I also found out that it is that date you opened the SIPP that counts toward the closure date (if youre concerned about early closure fees) and not the drawdown account as I had been infoirmed!

Snowbelle

skycatcher wrote: »

It needs to be kept in the drawdown. They will close the SIPP but it can be reopened if you want to put more in next year with a phone call.

I also found out that it is that date you opened the SIPP that counts toward the closure date (if youre concerned about early closure fees) and not the drawdown account as I had been infoirmed!

Thank you. When they close the SIPP if it's been open 12mths then there's no charge?

jerrysimon

Snowbelle wrote: »

Thank you. When they close the SIPP if it's been open 12mths then there's no charge?

I think there is a £25 charge, though I closed one last March after 12 months and set up a new one and there was no charge.

Snowbelle

jerrysimon wrote: »

I think there is a £25 charge, though I closed one last March after 12 months and set up a new one and there was no charge.

HL advised me that I needed to keep £1000 in the SIPP (not drawdown account) to avoid closure and the £25 charge even though the account had been set up for over 12mths. So to avoid any closure charges £1000 is needed in both the SIPP and drawdown account?