Money Purchase Annual Allowance (MPAA)

ffacoffipawb

When does the reduced limit of £4,000 kick in?

Is it the tax year a payment in excess of PCLS is taken (potentially catching contributions paid previously in the same tax year in excess of MPAA - effectively retrospective taxation) or from the moment the excess payment is taken?

I hope it is the latter, which seems logical, but can see no confirmation either way.

Thanks

xylophone

https://www.fidelity.co.uk/pension/money-purchase-annual-allowance

If your first taxable withdrawal is part way through the tax year, the reduced allowance only applies from this date onwards. Contributions before the first withdrawal would be measured against the standard annual allowance of 40,000. Contributions from that date to the end of the tax year would be measured at the reduced rate of £4,000 but overall contributions for this tax year will also be subject to your annual allowance. From the beginning of the next tax year, the reduced allowance (£4,000) applies for the whole tax year.

ffacoffipawb

Thanks for this. I suspect I will only take PCLS in the summer (age 55) if I carry on working.

Drawdown only if I take early retirement.

Retiring in December 2020 at the latest anyway with an extra 18 months' contributions.

Already at LTA give or take (2 DB at age 60 guesstimate £15k x 20 plus my DC pots of approx £800k assuming no bear market)