Does a pension scheme terminate is you make a withdrawal?
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The OP could pay £8000 into a SIPP, wait a few weeks for £2000 tax relief to be added and then withdraw the lot using the Small Pots Rule.
Repeat up to 3 times - about £500 profit each time and doesn't trigger the MPAA. :beer:
Scrounger0 -
The OP could pay £8000 into a SIPP, wait a few weeks for £2000 tax relief to be added and then withdraw the lot using the Small Pots Rule.
Repeat up to 3 times - about £500 profit each time and doesn't trigger the MPAA. :beer:
Scrounger
Just thinking. My BIL is 54 a civil servant and a basic rate tax payer. Am I correct in thinking he could use his savings to open 3 different x £8K SIPP this year and cash the 3 out next year making £500 profit x 3?
Also is it worth him using his savings to top up the equivalent of his annual earnings into a SIPP to get 25% tax free. I take it the disadvantage is when he cashes it in it is classed as crystallised?
Or am i totally misunderstanding, which wouldn't surprise me.Money SPENDING Expert0 -
Just thinking. My BIL is 54 a civil servant and a basic rate tax payer. Am I correct in thinking he could use his savings to open 3 different x £8K SIPP this year and cash the 3 out next year making £500 profit x 3?Also is it worth him using his savings to top up the equivalent of his annual earnings into a SIPP to get 25% tax free. I take it the disadvantage is when he cashes it in it is classed as crystallised?
Or am i totally misunderstanding, which wouldn't surprise me.
Scrounger0 -
Depending on earnings it would probably be more practical to do it over 2 or (even 3 years ) as he would need sufficient income to cover the total fund value ie £30k but then to cash it all in would then push him into the 40% band. Also factor in existing pension contributions.
Makes sense to me if he can afford it. :beer:
Scrounger
Many thanks Scrounger. He has £50k sitting in premium bonds so may as well do it up to his earnings level minus pension deductions.
Would be worth myself opening three pension pots of £8k as at moment I am putting a large part of my income into my works D.C. scheme but will wait until I am closer to 55.Money SPENDING Expert0 -
He has £50k sitting in premium bonds so may as well do it up to his earnings level minus pension deductions.... at moment I am putting a large part of my income into my works D.C. scheme...
Scrounger0 -
Ha, that is why he says he keeps the money in Premium Bonds. I've told him he can put it back in when he cashes in the SIPP.
If he puts £8k in a couple of weeks before his 55th birthday he can withdraw it as soon as he hits 55 I assume. Might be able to time it so he only skips a month.
I am getting salary sacrifice on my DC pension contributions. Can't believe how good it is and just wish I had realised sooner. Oh well better late than never. Should be able to afford to go at 55.Money SPENDING Expert0
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