Drawdown and TFLS 20 February at 4:50PM in Pensions, annuities & retirement planning 1 reply 190 views

Justso65

Hi

Am I correct in thinking I can crystallise any amount of my DC pot and take the corresponding 25% lump sum without needing to take the remaining 75% crystallised at the same time.

So for example, if I crystallise 50k and take the £12500 TFLS I can then take any proportion of the remaining £37500 when I want?  The thinking here is that this allows me to get that TFLS + Tax free allowance of £12570 out totalling £25070 tax free.  I would leave the remaining £24930 in the crystallised side of my SIPP to draw on later and hopefully grow in the meantime.  I could then top up that £25070 with tax free ISA money to have a tax free income for the year.  

Clearly tax is going to catch up at some point but I could run that way for quite a few years only incurring a tax hit if I need to draw further from the crystallised pot at some point or when my ISA’s run out and I need to use my SIPP for all my income.

The other thinking here is that this keeps money in a non-IHT wrapper as long as possible.  

Thanks, JS.

dunstonh

Am I correct in thinking I can crystallise any amount of my DC pot and take the corresponding 25% lump sum without needing to take the remaining 75% crystallised at the same time.

yes

  I could then top up that £25070 with tax free ISA money to have a tax free income for the year.  

Or put the ISA money in the pension (pension beats ISA in most cases)
and/or draw less from the pension to slow down your 25% draw over a longer period and use ISA money to make up the difference