Taxes Consolidation Act 1997 section 784

Retirement annuities: relief for premiums

Section 784 sets out the conditions under which an individual may claim tax relief on premiums paid under a retirement annuity contract (RAC), the requirements for Revenue approval of such contracts, the options available on retirement (including the approved retirement fund option), and the tax treatment of payments and benefits arising from RACs.

• An individual with relevant earnings chargeable to tax who pays a qualifying premium under a Revenue-approved annuity contract is entitled to income tax relief; the main benefit secured by the contract must be a life annuity in old age, and Revenue ceased approving new RACs from 1 January 2024
• To obtain Revenue approval, the contract must be with a lawful annuity provider, the annuity must not be capable of surrender or assignment, it must commence between ages 60 and 75, and up to 25% of the fund value may be taken as a tax-free retirement lump sum
• The contract must offer the individual the option, on or before the annuity commencement date, to transfer the fund value (after any lump sum) either to himself or herself as a cash payment subject to income tax, or to an approved retirement fund (ARF)
• Tax relief on RAC premiums is subject to age-related percentage limits on earnings (ranging from 15% for those under 30 to 40% for those aged 60 or over) and an overall earnings cap of €115,000; unrelieved premiums may be carried forward to subsequent years