Rory holds a Personal Fund Threshold certificate for €5.5 million. In 2020 he matured a PRSA valued at €3 million and has not taken any benefits from other retirement arrangements. What chargeable excess, if any, will arise for Rory in 2020 when taking benefits from the PRSA?

• A. Nil
• B. €1,000,000
• C. €700,000
• D. €1,300,000

Answer: (B)

Chargeable excess is the portion of retirement benefits paid in a year that exceeds the Personal Fund Threshold for that year; that excess is the amount subject to the charge.

Here, Rory takes 3 million from a PRSA in 2020 and has no other retirement withdrawals that year. The threshold used to determine excess in 2020 is 2 million, so the amount over threshold is 1 million. That 1 million is the chargeable excess for the year.

No other retirement benefits offset this in 2020, so the excess stands as 1,000,000.