Superannuation Discussion + market volatility

[Quickstatus]

cleaning' option

I understand it to mean that at retirement....
Transfer $X from Accumulation into Pension A
The 5% mandatory annual withdrawal from Pension A then recontributed into Pension B as a Non concessional recontribution up to $120K/year.
Annual lump sump withdrawal from Accumulation for living expenses but don't put it into Pension A as pension A contains 100% concessional contribution or recontribute excess as non concessional into Pension B?

Pension B then is 100% non concessional
When Accumulation account exhausted, then use Pension A.
But the Pesky 5% will also affect Pension B but will be small at first...

I dont know if that is even valid.....

My understanding is that recontribution from Pension A to Pension B does not affect the transfer balance cap

 

[SYD]

We have done exactly this, kept our accumulation account and have set up a pension account. We re still working so SS and SG into accumulation.

So did you do that via TTR (Transition to retirement)?

Transition to retirement | Australian Taxation Office

Find out how you may be able to reduce your working hours without reducing your income.

www.ato.gov.au

Actually, reading that ATO page suggests that a TRIS doesn’t get full tax free benefits.

The question then is whether to use up the Transfer balance cap on day of retirement...

Do you have a reference that says you can do that?

I explicitly asked my Fin Adv just the other day about hypothetically creating a Pension account with say $1m and retaining any balance in accumulation. Then later topping up to the TBC. Pretty sure he said it can’t be done with purely regular Super (including SMSF).

 

[Pushka]

So did you do that via TTR (Transition to retirement)?

Transition to retirement | Australian Taxation Office

Find out how you may be able to reduce your working hours without reducing your income.

www.ato.gov.au

Actually, reading that ATO page suggests that a TRIS doesn’t get full tax free benefits.


Do you have a reference that says you can do that?

I explicitly asked my Fin Adv just the other day about hypothetically creating a Pension account with say $1m and retaining any balance in accumulation. Then later topping up to the TBC. Pretty sure he said it can’t be done with purely regular Super (including SMSF).

Which part did you plan on topping up? Can’t top up at all once it’s in pension mode. Can in accumulation. When accumulation is converted to pension the percentages of taxed non taxed components stay the same.

No TRS used. Waited until the 67 mark hit.

We still have the full cap available in the accumulation phase.

 

[Quickstatus]

Actually, reading that ATO page suggests that a TRIS doesn’t get full tax free benefits.

My understanding is a TRIS just comes out of the accumulation phase and the underlying super supporting the TRIS is earnings taxed as it is still part of the accumulation account unlike the pension account assets supporting the pension annuity which is not taxed.

Pretty sure he said it can’t be done with purely regular Super

I thought it can - i could be wrong. Maybe someone can confirm..... The TBC just means that the retiree cannot have a Transfer balance account which exceeds the TBC.
As for the accumulation account - after retirement you can withdraw a lump sum tax free or continue to contribute up to the rolling TBC using the ATO prorata calculations. However the catch is that the accumulation account continues to be earnings taxed at 15%.

The net result is there is likely no net benefit keeping a portion of TBC in reserve.....

 

[burmans]

So did you do that via TTR (Transition to retirement)?

Transition to retirement | Australian Taxation Office

Find out how you may be able to reduce your working hours without reducing your income.

www.ato.gov.au

Actually, reading that ATO page suggests that a TRIS doesn’t get full tax free benefits.


Do you have a reference that says you can do that?

I explicitly asked my Fin Adv just the other day about hypothetically creating a Pension account with say $1m and retaining any balance in accumulation. Then later topping up to the TBC. Pretty sure he said it can’t be done with purely regular Super (including SMSF).

Right that you can’t top up, but you can create a new pension account (if your super fund allows. From the ATO itself

‘There is a lifetime limit on the maximum amount you can transfer into one or more tax-free retirement phase accounts. This is your transfer balance cap.

Once you start your income stream you're unable to add more money to it. Make sure you have made all contributions (including rollover amounts) to your super provider before your income stream starts. Any contributions made after your income stream starts will be put into a new super account with your provider.’

 

[SYD]

Right that you can’t top up,

Maybe my question to the FA was too specific. I’ll ask again in due course about hypothetically having 2 or more Super Pension accounts. I knew you can’t just top up an existing Pension account.

Once you start your income stream you're unable to add more money to it. Make sure you have made all contributions (including rollover amounts) to your super provider before your income stream starts. Any contributions made after your income stream starts will be put into a new super account with your provider.’

Yes, you would expect to maintain a parallel Accumulation account for ongoing contributions and any leftover above your TBC when you create the first Pension account.

 

[stm1sydney]

Have a read of Passiveinvestingaustralia. That has some very useful discussion and explanation of all these issues including recontribution strategy.

 

[CaptJCool]

Partial rated not full pension

There’s the rates

 

[RSD]

I'm planning to retire to an overseas country that unfortunately doesn't have a pension agreement with Australia so the two year rule leaves me with the option of working until I'm 67 or retiring earlier and then coming back for two years when it is time to apply for the pension - not happy about it but not much I can do about it.

 

[mrsterryn]

Thanks @CaptJCool . Always find that so fascinating

 

[SYD]

I'm planning to retire to an overseas country that unfortunately doesn't have a pension agreement with Australia so the two year rule leaves me with the option of working until I'm 67 or retiring earlier and then coming back for two years when it is time to apply for the pension - not happy about it but not much I can do about it.

What rule / issue is that?

 

[Quickstatus]

What rule / issue is that?

To qualify for AP, need ot be of
1) AP age
2) resident for 10 years with 5 years of that continuous
3) if retire early and overseas, cannot take pension overseas unless in the country for 2 conseciutive years from the age of eligibility - I think

 

[SYD]

To qualify for AP, need ot be of
1) AP age
2) resident for 10 years with 5 years of that continuous
3) if retire early and overseas, cannot take pension overseas unless in the country for 2 conseciutive years from the age of eligibility - I think

Ah, being primarily a “Super” related thread I was confused! As someone who hopefully will never qualify for the AP, I can disregard. But I was scratching my head why you couldn’t access “Super” OS.

Edit: the ref to age 67 was a give away….

 

[mrsterryn]

If you claim , not using an agreement country, you must be a resident in Australia. As in physically in Australia. If someone has been overseas for two or more years they need to start their residency again to take the payment overseas
That is kinda simplistic but there are rules around taking the payment overseas

 

[RSD]

To qualify for AP, need ot be of
1) AP age
2) resident for 10 years with 5 years of that continuous
3) if retire early and overseas, cannot take pension overseas unless in the country for 2 conseciutive years from the age of eligibility - I think

That's it in a nutshell. If the government was smart they would drop the two year rule as it would be cheaper for the government if people who aren't working lived overseas!

Post automatically merged: Yesterday at 7:54 PM

If you claim , not using an agreement country, you must be a resident in Australia. As in physically in Australia. If someone has been overseas for two or more years they need to start their residency again to take the payment overseas
That is kinda simplistic but there are rules around taking the payment overseas

Yes - its a right PITA!

 

[Pushka]

That's it in a nutshell. If the government was smart they would drop the two year rule as it would be cheaper for the government if people who aren't working lived overseas!

Post automatically merged: Yesterday at 7:54 PM

Yes - its a right PITA!

But not if they then claim the pension? Along with all the benefits that entails.

 

[Quickstatus]

Thanks @mrsterryn passiveinvesting link is excellent

So if I create a TTR account with $1.8M from Accumulation account A
I can withdraw $120K a year (between 4-10% withdrawal allowed). And recontribute it to a new Accumulation Account B as a non concessional contribution NCC.

After 5 years, commute balance back to A before age 65

At age 65 the pesky Transfer balance cap starts rearing its head. And at age 75 no longer able to make non concessional contributions. At Age 65 Withdraw $360k from A and make a NCC to B.

So the most I can wash is $360 at 65,68, 71,74 = $1.44M + the $600k from the TTR period = approx $2M
(Assuming the superfund allows this and NCC annual limit remains at $120K)

If using Pension account, In order to remain within the personal TBC, need to commute the $120K per year or $360 /3 years back to A (rather than withdraw) then withdraw from A and recontribute as NCC to B.

In order to minimise the number of pension accounts need to commute back to B if amounts are all NCC or back to A if concessional contributions, then recreate the pension accounts.

PITA

Can someone confirm please...

 

[JohnK]

Worst thing to do now is to move funds into higher return (potentially) but riskier (definitely) investment mix in order to chase a retirement target

There is no way I would take that sort of risk this late in life.

I have a target that I think will allow us 2 trips to Thailand a year of between 6-8 weeks per trip. Mine will be February/March and August/September to take advantage of low season airfares and hotels.

I've allowed between 4 years (65yo) and 8 years (69yo). Good if can get to target early otherwise wait longer.

 

[lakeman]

Thanks @mrsterryn passiveinvesting link is excellent

So if I create a TTR account with $1.8M from Accumulation account A
I can withdraw $120K a year (between 4-10% withdrawal allowed). And recontribute it to a new Accumulation Account B as a non concessional contribution NCC.

After 5 years, commute balance back to A before age 65

At age 65 the pesky Transfer balance cap starts rearing its head. And at age 75 no longer able to make non concessional contributions. At Age 65 Withdraw $360k from A and make a NCC to B.

So the most I can wash is $360 at 65,68, 71,74 = $1.44M + the $600k from the TTR period = approx $2M
(Assuming the superfund allows this and NCC annual limit remains at $120K)

If using Pension account, In order to remain within the personal TBC, need to commute the $120K per year or $360 /3 years back to A (rather than withdraw) then withdraw from A and recontribute as NCC to B.

In order to minimise the number of pension accounts need to commute back to B if amounts are all NCC or back to A if concessional contributions, then recreate the pension accounts.

PITA

Can someone confirm please...

I think there are some complicated calculations that would need to be done and the ability to bring forward contributions to the 360000 every 3 years is dependant on your total superannuation balance , which you imply is close to the limits.
I suspect you need specialist advice which some members could give but would not in this forum.
Good luck.

 

[Quickstatus]

suspect you need specialist advice which some members could give but would not in this forum.

Thx but not looking for special advice on actual amounts but whether , generally, this is possible.