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My husband, aged 60, already has a transition to retirement pension in our SMSF.
I propose withdrawing the maximum pension and reinvesting it as a non concessional contribution to decrease the taxable component of his super.
Under current legislation will this be correct, or is it the case once a pension has started the taxable and non taxable components are fixed?
A: Yes, once a pension commences the taxable/tax-free split can’t change. The only way to decrease the taxable component is to commute the pension in full (if this is allowed under the pension’s rules), then take a lump sum out if you’re allowed to do this under the preservation rules, make the contribution after considering the contribution caps and then commence the pension under the revised taxable/tax-free percentages.
This sounds difficult but it’s mainly administration work. There is a need to be careful especially in relation to the various tax and super laws.
