My husband aged 62 and I (aged 58) both have TTRP and I cannot see the benefit of keeping them now. We both still work, and whilst I have the option to retire, I see no benefit now until I can withdraw a pension tax free when I’m 60. We both salary sacrifice to the max and don’t require the income from the pension. I have been ‘recycling’ both pensions as non-concessional contributions to decrease tax paid by beneficiaries of our estate. I became eligible for a defined benefits pension prior to age 55 because of a major health condition, which was unexpectedly cured, but that pension continued. When I got well again, I began part time work in a different field. Now my SMSF and QSuper balances would be in excess of $1.6 million. I will seek professional advice but want to be clear on a few things before my appointment.
- If I cancel our pensions in SMSF to revert to Accumulation- will the taxed and non-taxed components be decided when we begin pensions in the future?
- Am I correct in thinking I can withdraw $180000 – untaxed – from one of my super funds, which I could contribute to my husband’s Super to balance our amounts?
- Also we have a property which has not recovered its price since the GFC downfall, so we want to keep its actual cost base and not take up the option to redistribute capital bases.
- I’m already over $1.6m and see no benefit for me to have a pension until I’m 60. Am I correct in thinking that if I delay setting up the pension until 2018 the amount allowed in pension phase could actually be a little in excess of $1.6m anyway? And my husband wouldn’t be locked into that figure either even though his balance is not that high?
- Simply if we don’t need the pension income is there any advantage at all to continuing TTRP.
Thank you for your advice.
A: Thanks for the questions.
Yes, if you don’t need the income, then there will be no advantage to you in keeping the TTRP and you should roll it back before 1 July.
To answer your other questions:
- If you commute the TTRP back to accumulation, the concessional/non-concessional components will be determined when you begin the pension in the future;
- You can withdraw up to $195,000 as a lump sum (not $180,000) from your taxable component and not pay any tax. This is known as the low rate cap amount and is a lifetime limit. You will, however, need to meet a condition of release to do so. As you are under 60, you could only to do this if you retired permanently;
- The transfer balance cap of $1.6m will be indexed, but only in $100,000 increments. It is thus unlikely that it will be any higher in 2018/19.
Regards
