Taking Money out of SIPP

rudebh0y

Hello    I am 58  and as well as a DB pension I have £330k in a DC SIPP which I am still contributing quite heavily  . I want to take 30k out of my SIPP.  IS it a matter of asking for roughly  10% of pot  or is that me crystallising everything?  I don't want to withdraw any more cash for foreseeable.

Steve_666_

You can crystallise £120K of the 330K(as long as the SIPP provider allows!), take the 30K tax free lump sum. Do not take any taxable monies, if you do you will trigger the MPAA

dunstonh

 IS it a matter of asking for roughly  10% of pot  or is that me crystallising everything?

Neither of those.
You would need to use drawdown and crystalise £120k. (90k will go into the crystallised segment of your pension and £30k will be paid out as TFC)

rudebh0y

Thanks for reply 

So the 90K left after 30K withdrawal stays invested?  And my yearly contributions goes into pot of £210k invested  allowing me 25% of that at later date?  

MallyGirl

yes. Depending on your pension provider they may show it as 2 separate pots or there may be a nominal balance on each.

rudebh0y

Thanks for the replies everyone much appreciated.

Albermarle

rudebh0y said:

Thanks for the replies everyone much appreciated.

You will need to have contact with the SIPP provider to tell them what you want to do.
Also they are obliged to ask you various questions to make sure you fully understand what you are doing, and they may ask if you have spoken to Pensionwise ( free govt service) and will probably recommend you speak to a financial advisor.
It is a bit ' Nanny State' but it is to stop people doing something stupid, and then claiming later they did not understand. Some providers make more of a meal out of it than others.

IvanOpinion

Can I ask a follow on question?
Assuming the £90K, that has been crystallised, remains invested and continues to grow, what happens to the investment growth? Does that get added to the crystallised amount or does it get added to the uncrystallised amount.

I am thinking that if it is the former (i.e. added to crystallised) then the owner of the SIPP could be giving away a significant amount of tax free money if they crystallise in the early days.

NoMore

Growth on crystallised is added to the crystallised portion. 

So yes accessing the whole of your 25% tax free early as possible for no other reason than to get it, is not usually the correct course of action and rarely recommended by the veterans of this forum.

Albermarle

NoMore said:

Growth on crystallised is added to the crystallised portion. 

So yes accessing the whole of your 25% tax free early as possible for no other reason than to get it, is not usually the correct course of action and rarely recommended by the veterans of this forum.

Although if the tax free money is invested in a similar way as it was in the pension, then the result would be the same. Then of course it begs the question why take it out in the first place.