The Finance Bill 2024 contains proposals to limit employer contributions to an employee’s Personal Retirement Savings Accounts (PRSAs).
Since 1 January 2023, there has been no limit with respect to employer contributions to an employee’s PRSA (subject to the €2 million Standard Fund Threshold for pensions). This provided Directors and employees with an opportunity to maximise contributions to PRSAs from their employer without the payments becoming subject to Benefit in Kind (BIK). It also allowed for full tax deduction for the Employer.
The proposed new rules seek to limit employer contributions to employee PRSAs to 100% of the employee’s salary which represents a substantial change. It is not yet clear when the proposed new rules will come into effect, however, many experts in the pensions industry are speculating that changes may commence effective from 1 January 2025.
Our Recommendation
If you wish to avail of the existing generous PRSA rules (which also apply to company shareholders and Directors who are employed by their company), we strongly urge you to contact your pensions advisor as soon as possible. Individuals (including spouses) who are employed by sole traders or partnerships may also qualify for employer contributions to the employee’s PRSA. Your pensions advisor can confirm your allowable contributions under the current rules.
We hope you found this notice helpful. Should you have any queries, please do not hesitate to reach out to our dedicated tax experts here at Ormsby & Rhodes by emailing info@ormsby-rhodes.ie.
