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What happens when you start to take your SIPP?
billpaul812
Posts: 67 Forumite
If you take it as a 25% lump sum plus drawdown, does the SIPP effectively get frozen at that point, ie can't pay any more in? I presume that it will still grow a bit depending on the chosen investment options.
Just wondering this because if any more is paid in then there would be another lump sum wouldn't there.
Confused.
Just wondering this because if any more is paid in then there would be another lump sum wouldn't there.
Confused.
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Comments
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billpaul812 wrote: »If you take it as a 25% lump sum plus drawdown, does the SIPP effectively get frozen at that point, ie can't pay any more in? I presume that it will still grow a bit depending on the chosen investment options.
Just wondering this because if any more is paid in then there would be another lump sum wouldn't there.
Confused.
As I understand it the amount you have at the point you take the 25% becomes 'crystallised'. Anything you add in future goes into a new separate 'uncrystallised' part of your SIPP.0 -
Makes sense, thanks0
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You can still pay in after taking the tax free cash (assuming you're not breaking the recycling rules).
However, if you start taking income/lump sums from the remainder (which still remains invested), your contribution is limited to the 'money purchase annual allowance', currently set at £4000 for this tax year rather than the usual limits.0 -
On the recycling is that all about qualifying income etc or do HMRC look into exactly how the investment is funded?0
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billpaul812 wrote: »On the recycling is that all about qualifying income etc or do HMRC look into exactly how the investment is funded?
http://www.pruadviser.co.uk/content/knowledge/technical-centre/pension-recycling/0 -
When I cashed my full 25% in*, I was left with 75% in a new one called "Drawdown SIPP" and the original empty SIPP (that would be the recipient of any more payments eg the £2880 or whatever)
* done because I'm nudging the LTA0 -
So would i be right in assuming you don't crystalize until you absolutely need to as its a red line you cross, a point of no return?0
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NorthernGeezer wrote: »So would i be right in assuming you don't crystalize until you absolutely need to as its a red line you cross, a point of no return?
The general rule of thumb is to not access the pension unless you need it or it is for tax efficiency.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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