Taking TFLS. Rest is invested?

deepam

Hi,

I am taking entire TFLS next week. Does this mean the rest of 75% is considered as a drawdown pot?

If yes then how does it different from current 100% invested?
What are they key differences - please explain I am totally blank

Thanks

QrizB

deepam said:

I am taking entire TFLS next week. Does this mean the rest of 75% is considered as a drawdown pot?

Yes.

deepam said:

If yes then how does it different from current 100% invested?

If you've not asked your provider to change your investments, they won't. It'll just be 25% smaller.

DRS1

You'll need to sell enough of your investments to have the cash needed to pay the 25% TFLS.

If you have only invested in one thing that is easy otherwise you need to decide what you want to sell.

LHW99

a) The remaining 75% is crystallised after taking the TFLS, and is then all taxable at your normal rate (0%, 20%, etc).

b) Before you take the TFLS, the 100% is uncrystallised.

Any increase in the value of a) will also all be taxable when you withdraw it - no more tax-free money.

In b) any increase in value of the 100% results in an increased 25% for a TFLS when eventually taken, with the (larger) residual 75% taxable. Or of course, in the case of a crash, both numbers would get smaller!