Wealth Extraction for Directors

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How to turn your company profit into personal wealth

There are many potential benefits of being a company owner or company director. Transferring company profits into a directors pension, also known as executive pensions, is one of the most attractive and tax efficient ways for company directors to extract profits from the business and turn profits into personal wealth. 

If you take profit or earnings from the company there will be an immediate personal tax liability. So, lets make the massive assumption you have sufficient cash-flow for your annual living expenses from your salary, what to do next? Speak with one of our team for free impartial directors pension advice. 

Tax benefits of Directors Pensions

Deferring income until retirement, anytime from 50 onward, and investing in a directors pension plan results in benefits such as:

  1. Corporation Tax Relief (Not guaranteed, subject to limits).
  2. No PRSI payable on company’s pension contribution.
  3. USC is not payable on the company’s  pension contribution.
  4. No Benefit in Kind (BIK) on the company’s pension contribution.

A directors pension plan is a company pension scheme set up by the company for the benefit of executives or key employees of the company. 

With a Directors Pension both the employee and the company can make contributions, or just the company. The ultimate value of your pension plan will depend on the contributions you and your company make over the years, along with the investment performance of your Executive Pension.

Company owners directors pension benefits

The following is a list of some of the attractive benefits on offer within a directors pension:

  1. Tax-Free Growth on fund (i.e no DIRT, CGT or Exit Tax).
  2. Tax effective retirement lump sum, up to €500,000.
  3. Post Retirement tax planning (Approved Retirement Funds and Personal Retirement Bonds).
  4. Earnings cap not applicable to employer contributions!

If for some reason none of the director’s pension benefits appeal to you, there are at least two more tax efficient, legitimate and attractive ways to transfer ownership of company profits to your personal ownership.

These include:

  1. Redundancy Packages
  2. Retirement Relief from Capital Gains Tax

Ready to get started?

See what our retirement planning specialists can do for you.

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