Context: at the cusp of retirement; expect to have enough retirement income; give what's left to charity.
Have a pair of related pensions, one defined benefit (DB), one defined contribution (DC). Could deal with them separately, in all the normal PensionWise-y ways.
If the DB were taken its own, it would be a 25%-tax-free PCLS of 52K (GBP) and an annual pension of 7.9K.
The DC pot is about 100K; taken on its own, it might be a PCLS of 25K and perhaps an annual pension of 3.6K.
The weird extra option is "offsetting your DC Fund", where the DB choice is augmented by the money from the DC fund. This would give a PCLS of 86K, an annual pension of 12K, and leaving a "residual DC fund" of 14K. (I _believe_ this "uses up" the DC, i.e. would have to pay tax now on that 14K.)
Offsetting seems to put the most money in your pocket right now, but maybe it's no great advantage viewed over the long term? (Or is offsetting one of those "grab it if you can" things?)
But what if you *don't* need to run up monthly income? Wouldn't it be better to take the DB in the ordinary way (the 7.9K option above), and leave the DC alone? Then the Money Purchase Annual Allowance (MPAA) doesn't get turned on -- yes?
That way, if monthly income exceeds expenditure, you can stash it in the DC (or SIPP). If that money is still there on Big Exit, it goes to charity as not-yet-taxed money. Good, yes? As always: yay for Bogleheads!
Have a pair of related pensions, one defined benefit (DB), one defined contribution (DC). Could deal with them separately, in all the normal PensionWise-y ways.
If the DB were taken its own, it would be a 25%-tax-free PCLS of 52K (GBP) and an annual pension of 7.9K.
The DC pot is about 100K; taken on its own, it might be a PCLS of 25K and perhaps an annual pension of 3.6K.
The weird extra option is "offsetting your DC Fund", where the DB choice is augmented by the money from the DC fund. This would give a PCLS of 86K, an annual pension of 12K, and leaving a "residual DC fund" of 14K. (I _believe_ this "uses up" the DC, i.e. would have to pay tax now on that 14K.)
Offsetting seems to put the most money in your pocket right now, but maybe it's no great advantage viewed over the long term? (Or is offsetting one of those "grab it if you can" things?)
But what if you *don't* need to run up monthly income? Wouldn't it be better to take the DB in the ordinary way (the 7.9K option above), and leave the DC alone? Then the Money Purchase Annual Allowance (MPAA) doesn't get turned on -- yes?
That way, if monthly income exceeds expenditure, you can stash it in the DC (or SIPP). If that money is still there on Big Exit, it goes to charity as not-yet-taxed money. Good, yes? As always: yay for Bogleheads!
Statistics: Posted by jsug90kra6 — Sat Aug 03, 2024 3:56 am — Replies 0 — Views 63