This eBrief confirms the update to Chapter 27 of the Pensions manual, providing additional details on the tax and filing obligations for excess lump sums. Excess lump sums refer to any amount exceeding the €200,000 tax-free lifetime limit.
Lump sums between €200,000 and €500,000 will be subject to a standard tax rate of 20%. This tax must be remitted to Revenue using Form 790AA within three months from the end of the month in which the lump sum is paid to the individual. It's important to note that this portion of the excess lump sum and its associated tax should not be included in the payroll submission.
For lump sums that exceed €500,000, the excess amount will be taxable at the individual's marginal rate through payroll. The pension administrator is responsible for returning this tax to Revenue through a Payroll Submission.