Lump sum pension payment?

Hannahh161838ByHannahh161838

Hello,

I am currently preparing my parents' 2023 income tax return and have a specific question regarding form R-AV:

My father received approximately €20,000 in disability pension and widow's pension and had the company pension plan of his wife, who died in 2022, paid out in full in 2023 in the amount of €51,000.
Accordingly, the marginal tax rate increases significantly.
Is the fifths rule possible here, and would it make sense to apply it? How do I apply for it via Elster?

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siola55
siola55
5 months ago

https://www.insurancy.de/betriebliche-alterssorge/fuenftelregulation/

such as: Example from case law on occupational pension schemes One-off payment Fifths rule

The enforcement of tax advantages often depends on precedents decided by supreme courts such as the Federal Fiscal Court . In the context of occupational pension plans, the distinction between typical and atypical lump-sum payments is a crucial criterion for the application of the fifths rule.

Decisions of the Federal Fiscal Court on atypical payments

In its case law on occupational pension schemes, the Federal Fiscal Court has repeatedly clarified that not every lump sum payment can automatically be classified as atypical. A detailed examination of the individual case is required to determine whether the payment arrangement deviates from the usual payment arrangements.

Practical case: Early payout and fifth rule

In a notable case, the Federal Fiscal Court ruled that an early payout of a direct insurance policy is considered atypical if the transaction occurs outside the usual course of action . Such an atypical case allowed for the application of the fifths rule, resulting in a significant reduction in the taxpayer's tax burden.

  • Initiation of the examination for atypicality of the payment.
  • Identification of the difference to the usual retirement payout process.
  • Recognition of the one-off payment as one-off and extraordinary income .
  • Enabling a tax-saving fifths rule.

This probably also includes early payouts due to death…!?

See also this link: https://www.bavheute.de/recht-und-politik/finanzgericht-verwaehrt-fuenftelregelung/#

Greetings siola55

1
siola55
siola55
5 months ago
Reply to  siola55

I think the tax office will do a more favorable assessment on its own…!?

0
bielz54
bielz54
5 months ago

In the year of death and the year following the death of your spouse, you are still considered married for tax purposes and are entitled to the lower tax rate. And double the tax allowances. Have you taken that into account?

0
bielz54
bielz54
5 months ago
Reply to  bielz54

Addendum: In my opinion, this has no effect on the widower's pension.

-1
christl10
christl10
5 months ago

For questions like these, I have a tax advisor who does it for me.

-2