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Levensloop / life cycle savings - should I decide to take the whole amount as a lump sum now?


Question:

My husband has some levensloop savings and has now been told that there is a special tax arrangement in 2015 to withdraw the money.

My question is, what would be the most advantageous option? Withdraw in 2015 or leave it until retirement (when we expect to return to the UK). This assumes leaving it that long is allowed. I read somewhere about a deadline of 2021. My husband officially retires 2033 (67yr).

 
Answer:

The life-cycle savings scheme was discontinued on 1 January 2012. If the balance of the savings was lower than € 3,000 at that date the balance was paid out the latest on 1 January 2013. If the balance was higher than € 3,000 the saved amount could be kept on the account and paid out at a later date. Deposits can‘t be made to the account anymore.

In 2013 it was possible to withdraw the saved amount with payment of tax on only 80% of the withdrawn amount. In 2015 this option is available again, to "convince” people to spend their life-cycle savings. If the levensloop is paid out in 2015 then only 80% of the amount which was saved on 1 January 2012 is taxed instead of 100%. Be aware: the amount which was deposited in 2012 will be taxed at 100%. So the beneficial arrangement only sees on amounts saved till 31 December 2011. It is not possible to partially withdraw the saved amount.

From 2016 onwards 100% of the entire pay out will be taxed again. The scheme ends on 31 December 2021. The entire amount on the levensloop account will then automatically be paid out. So it can’t be kept their till retirement.

You have to choose between paying out now and the latest in 2021. By paying out now up to 20% of the amount can be received tax free. By keeping it on the account and receive the money later you may only benefit if the tax rate which your husbands pays at that moment is lower than the tax rate which he pays in 2015 as a result of (much) lower income or for example emigration from the Netherlands.

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