Tax on benefits on death
Benefits emerging from a pension fund on the death of a member are assessable on the recipients for the purposes of Capital Acquisitions Tax (CAT) and/or income tax.
Lumps sums payable are subject to CAT. Under current legislation, spouses including divorced spouses pay no CAT. Payments to children and other beneficiaries are subject to the CAT thresholds which apply to them.
Spouses' and dependants' pensions are payable subject to income tax in the course of payment, and the Universal Social Charge, but not PRSI deductions.
Benefits payable from AMRF/ARFs can be passed to a spouse or civil partner without payment of CAT or income tax. (A tax rate of 20% applies subsequently on the death of the spouse or civil partner). Otherwise AMRF/ARFs are treated as if they had been drawn down on death and are subject to marginal rate income tax (or 30% if inherited by a child over age 21).