The retirement provision, deposit and/or death

The phase-out of the self-administered pension has been around for a while. Until 31 December 2019, this pension could be bought out or converted into a parent's pension obligation (ODV).

The director-major shareholder (DGA) can choose to pay off his ODV into an annuity. When making a payment into an annuity, one must comply with the legal fiscal rules that apply to annuities. One of these rules is that the annuity must start at the latest in the calendar year five years after reaching the age of AOW.

This may cause a problem for the older DMS, because if one has passed this age, paying out is no longer possible. To solve this problem, a recent decree approved conversion into an annuity product even after the "state pension age plus five years". Admittedly under four conditions:

1. The annuity payments must start immediately
2. The minimum benefit period of 20 years may be reduced by the ODV period already elapsed from the state pension age onwards.
3. The full value of the PSO must be used for an annuity
4. A request for approval must be submitted to the tax authorities

When the entrepreneur dies, the PSO falls into his or her estate. Subsequently, the applicable matrimonial property law is important as well as the existence or not of a will to determine who is entitled to the benefit after death. In a will, an ODV payment can be allocated to one of the heirs by means of a bequest.

If the DGA dies during the accrual phase, the right to the PSO is transferred to the heirs and if there are several -natural- persons this right is split. This gives each entitled person their own ODV right that must be converted into an ODV payment within 12 months.

Each heir can in turn choose whether or not to convert this PSO right into an annuity product with an insurer or bank. When depositing, as indicated earlier, one has to abide by the tax game rules. These rules are peculiar for the heirs, as no immediate annuity can be bought. What can be purchased is a lifelong or temporary old-age annuity through which payments only start later. It may also be desirable in appropriate cases.

Are you a DMS and do you have an ODV? It pays to take stock of several things right away, namely your matrimonial property regime, will, PSO agreement, personal and financial situation. There are many options from which you may be able to get more (desired) flexibility for yourself or your heirs.

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