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Good forward-thinking business planning means that SME owners should look at their options for extracting profits from their business in the most tax efficient manner.
Better known as Wealth Extraction, this is the efficient means of withdrawing profits for the benefit of the business owner in the most tax efficient means possible which if done well, could lead to financial freedom in retirement.
Key Advantages of investing your business profits in a Pension
Corporation Tax Relief for the Employer @ 12.5% (Subject to Contribution Limits).
Generous Limits for Employer’s to contribute.
No Income Tax, PRSI or USC liability for the employee following the contribution.
No PRSI Liability for the Employer as a result of remunerating the employee in this way.
Profits invested in pension fund which allows tax free growth until retirement.
Opportunity to plan for business exit strategy with access to funds available as early as 50 if all links with the business are severed or any time after age 60 without having to sever any links with the business.
Pension lump sum at retirement which is tax free up to the first €200,000 and subject to favourable rate of 20% for the next €300,000.
Income in retirement via Pension Annuity or Approved Retirement Fund.
Possibility to pass wealth to spouse and children via Approved Retirement Fund.