SIPP drawdown

singhini

NoMore said:

Pension Options at Retirement | Income Options - ii

You can do either (or a combination) of A and B, I think singhini was pointing out to make sure you choose the option you want.

Correct, Thanks 

tribetown

The plan is take 25% cash lump sum and leave the rest invested.

Take out further lump sums as and when needed.

From reading the link provided (thank-you) I will initiate a pension commencement lump sum, PCLS.

singhini

@tribetown Sounds like a good plan. And the link provided by @NoMore is great as it illustrates my point i.e. that there are various options to taking the tax free money (The reason i posted on your thread is i didn't want you to end up paying unnecessary tax).

Just remember when you take those "further lump sums as and when needed" they will be taxed (but under certain conditions you might be able to get the tax back).

Personally i'm not taking money from my SIPP yet (too young)  but when i come to take money from my SIPP i  intend to have stopped working and thus i will be asking for £16,760 each year but paying no tax (£4,190 will be the 25% tax free and the other £12,570 will be within my personal allowance).

(Note to myself: i'm aware i may be taxed on the £12,570 but i can always get it back at the end of the tax year. i must make sure the pension company have my correct tax code before i start taking any money). 

tribetown

Thank-you for your detailed reply, I appreciate it.

Yes, I understand that further lump sums could be taxable. I plan to keep any further lump sums for when I am not working and below £12,570. 

LHW99

Also, for future reference, should you come back later to take some of that potentially taxable money, you will trigger the MPAA, and be limited to a £10k pa pension contribution from then on (currently), which may or may not become an issue if you were still working.

Marcon

LHW99 said:

Also, for future reference, should you come back later to take some of that potentially taxable money, you will trigger the MPAA, and be limited to a £10k pa pension contribution from then on (currently), which may or may not become an issue if you were still working.

Just to expand a bit further....the £10K pa limit applies to contributions made to a defined contribution scheme and includes tax relief on personal contributions; plus employer contributions (which are always paid gross). 'Carry forward' is no longer available as a possibility.

If by any chance you joined a defined benefit scheme, the MPAA does not apply.

Hoenir

DRS1 said:

Surely you can just sell whatever you like? It is YOUR SIPP.

Providing the option is available to you. What is permissable and what is possible do differ.  

michaels

tribetown said:

I am over 55 years of age and would like to take a 25% tax free lump sum from my SIPP.

My SIPP consists of 3 different US shares and a small amount of cash (£150) that I leave in there to cover fees.

Am I able to decide which shares are sold to raise the 25%, can I sell some of each?
Can I specify to leave the current cash in the SIPP?

I'm sure you are aware but having your pension invested in only a few assets in a single market may leave you exposed to considerable volatility even to the point where your 25% cash is no longer 25% when the pcls calculation is made.

Albermarle

tribetown said:

Thank-you for your detailed reply, I appreciate it.

Yes, I understand that further lump sums could be taxable. I plan to keep any further lump sums for when I am not working and below £12,570. 

Just to be clear, if you take a taxable lump sum of £12570, then tax will be taken off it ( maybe quite a lot) even if it is your only income. You can claim this back though.
The issue is that when you take a lump sum one month, the tax system assumes you will then get that amount every month and taxes you accordingly.
If you spread the £12570 income over 12 separate months, then you should not have to pay any tax or claim it back. 

tribetown

LHW99 said:

Also, for future reference, should you come back later to take some of that potentially taxable money, you will trigger the MPAA, and be limited to a £10k pa pension contribution from then on (currently), which may or may not become an issue if you were still working.

Thank-you, yes I had read that and I am ok with that.