On the assumption that your client has already moved/deposited benefits into a Flexi-Access Drawdown account, these benefits can be preserved for one's preferred beneficiaries - rather than taking the benefits as taxable income. The steps are as follows:
- Set the Withdrawal Limits via the Pensions > Drawdown Pension screen, to 'Do Not Allow'.
- Designate one’s preferred beneficiaries, i.e. to whom the benefits will be distributed, via Advanced Settings > Beneficiary Designation.
- Choose the desired 'survivorship option', i.e. how the benefits will be distributed, via Advanced Settings > Survivorship Option.
- Step One: Set withdrawals of taxable income to 'Do Not Allow'
The remaining 75% (the potentially taxable portion) of the benefits will be deposited to the individual's drawdown account. To ensure these benefits are preserved for one's intended beneficiaries, one should navigate to the Pensions > Drawdown Pension screen, where taxable income should be set to 'Do Not Allow', as shown below:
- Step Two: Designate one's chosen beneficiaries
By default, benefits will be left to one's spouse, or partner. Benefits held in a pension drawdown account can be left to, or divided between, any other individuals inside of the plan or, indeed, to persons outside of the plan. From within the Pensions > Drawdown Pension screen, open Advanced Settings > Beneficiary Designation, to enter instructions, as appropriate.
- Step Three: Choose the desired 'Survivorship Option' - lump sum, drawdown, or annuity
If one dies before reaching age 75, one's beneficiaries will pay no tax on any pension benefits left to them. If mortality occurs on, or after reaching age 75, the inherited benefits become taxable, but only at the recipient's marginal rate of income tax. The software’s current default setting is to deposit benefits into a 'pension drawdown' account, created automatically on behalf of the recipient. From within the Pensions > Drawdown Pension screen, open Advanced Settings > Survivorship Option, to enter the appropriate instruction.
To return to 'Retirement Planning Options - Default Settings' click here <<<
Last updated 3 June 2019, Release 5.0.24