Using a Pension to Maximise Wealth Extraction from Your Company (30 second read)
If you have established a successful company which is profitable, then the company should serve you, and in order to do this you need to be able to extract wealth from the company in the most tax effective manner possible.
As a company director you have substantial scope to use pension legislation as a tool for extracting wealth from your company, so you can benefit from advice on the more technical aspects of pension law and investment management. We encourage our clients to look at pensions as a tool for tax effective wealth extraction. Few business owners use the legislation to maximum effect. Most have scope to do additional tax planning.
One of the most attractive and tax efficient ways for company directors to extract profits from their company and turn them into personal wealth is to have their company make contributions to an Executive Pension plan.
Many people are familiar with the age related tax relievable pension contributions which you are permitted to make, 25% in your forties etc. If you can access an Executive Pension the company which establishes it for you can usually make substantially higher contributions, which are deductible for corporation tax purposes, and it has significant ability to contribute more to make up for missed years.
Even if you don’t favour pensions, the legislation can allow you to extract up to €200,000 from your company tax free and a further €300,000 at 20% tax. With marginal tax rates so high, extracting wealth from your business tax effectively is key to building personal wealth.
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Best Pension Advice is a trading name of Highfield Financial Planning, the most client focused financial services company in Ireland. We provide superior advice on Retirement Planning for all types of pension available in the Irish market. As Specialist Investment Advisers we can also help you to manage the investment of your pension to achieve your income objectives in retirement.