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Taking tax free lump sum from SIPP
Goldiegirl
Posts: 8,816 Forumite
My husband has a SIPP, currently valued at approximately £215K.
He has never needed to draw any money from the SIPP, and it's general purpose is to leave the funds invested for him to use if I die first, or for me to inherit if he dies first.
However, he is 75 later this year, and our thoughts are turning towards taking the 25% tax free lump sum from the SIPP.
Although the funds aren't actually needed at this time, we feel it makes sense to take the money this year. Although my husband is currently in good health at the present time, we know that if he dies after the age of 75 and hasn't drawn the money then the tax free status is lost.
I'd be grateful for any thoughts and comments, particularly, is there any reason to keep the 25% in the SIPP and NOT draw it down at this time,
Many thanks
He has never needed to draw any money from the SIPP, and it's general purpose is to leave the funds invested for him to use if I die first, or for me to inherit if he dies first.
However, he is 75 later this year, and our thoughts are turning towards taking the 25% tax free lump sum from the SIPP.
Although the funds aren't actually needed at this time, we feel it makes sense to take the money this year. Although my husband is currently in good health at the present time, we know that if he dies after the age of 75 and hasn't drawn the money then the tax free status is lost.
I'd be grateful for any thoughts and comments, particularly, is there any reason to keep the 25% in the SIPP and NOT draw it down at this time,
Many thanks
Early retired - 18th December 2014
If your dreams don't scare you, they're not big enough
If your dreams don't scare you, they're not big enough
0
Comments
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25% of the pot is c £53k. Where would he put that? This year's and next year's ISAs for both of you would mop it up. But if those aren't free - what? Premium bonds? A weekend break in Monte Carlo?
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If it were me I would immediately (if headroom is available) take the 25%, recycle £40K straight into an equivalent investments within your two ISA's with a view to investing the other £13.75K in April if you don't need the money now
This is free money - take it
Regards
Tet0 -
Due to the age issue, this is one time where it is probably a good idea to take the tax free cash, even if there is no immediate need for it.2
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Another in the camp for taking the TFC now and either spending, gifting or recycling into ISAsI’m a Forum Ambassador and I support the Forum Team on the Pension, Debt Free Wanabee, and Over 50 Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the Report button, or by e-mailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0
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My OH has recently done exactly this. The age 75 change in tax treatment is a valid reason IMO
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Thank you all for your input - it's confirmed to me that it'll be the right thing to do.
The plan is to feed most of the funds into our S&S ISAs, but we intend to keep some back to pay for some special things we want to do this year. As my husband will be 75 and it'll be our 45th wedding anniversary it seems like a special year, so we have some celebratory plans.
Early retired - 18th December 2014
If your dreams don't scare you, they're not big enough2
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