A PRSA, as a self-administered pension scheme, is liable for income tax, PRSI, and USC charges when funds are withdrawn, or imputed distributions are made.
Withdrawals from a PRSA are taxable at the pension holder’s marginal rate after the taking of the tax-free lump sum.
Transfers from a PRSA to an Approved Retirement Fund or into another PRSA are not treated as taxable withdrawals.
Imputed distributions for a PRSA come into effect when it is deemed ‘vested’. This is when the pension’s assets become available to the owner.
When the value of the fund is less than €2 million, this means a mandatory withdrawal of 4% of the fund if you are not over 70, increasing to 5% when a person is 71 or older.
If the value of the PRSA exceeds €2 million in total, there is a mandatory 6% imputed distribution which is subject to tax.