A brief summary of what happens to an ARF fund on death

With an Approved Retirement Fund (ARF), when you die you can leave any remaining funds to your spouse/civil partner or other beneficiaries. If you leave the funds to your spouse or civil partner, the funds can be transferred to an Approved Retirement Fund in their name. In all other cases, the funds are wound up and the proceeds are passed to your estate. If income tax is due, the ARF provider will deduct this before paying the proceeds of your fund to your estate.

A summary of the tax rules after your death:

ARF inherited by Income Tax due Capital Acquisitions Tax due
Surviving spouse No tax due on the transfer to an ARF in the spouse’s name No
Children (under 21) No tax due Yes*
Children 21 and over Yes (30%) No
Others (including surviving spouse/civil partner if benefit paid out as a lump sum) Yes, at deceased’s tax rate at the time of death (either 20% or 40%) Yes*

*Normal Capital Acquisitions Tax thresholds apply.

The Revenue’s detailed notes are found in www.revenue.ie/en/about/foi/s16/pensions/chapter-23.pdf. The above is only a summary and you should seek specialist financial and tax advice regarding this issue.

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