Leaving Super in Accumulation Phase

Previous

Next

8 Comments

  1. tony

    hi chris love your work. hope you can help me!..born 15 07 61, want to ” retire ” withdraw $100,000.. pay off my house. and after maybe 2+ months go back to work as fulltime casual. Is this all possible and legal…thankyou.

    Reply
    • Chris Strano

      Hi Tony, thanks!
      Your superannuation preservation age is 57, which you have met. This means that you could have unrestricted access to your super if you were to retire with no intention of returning to work. This could also be accessed tax free using the low rate cap amount. However, if you intend on returning to work, it is not possible to access your super in this way.
      The other alternative may be to wait until age 60, which provides you with the ability to have full access to your super if you ‘cease an employment arrangement after turning age 60’ – regardless of whether you return to work or not.
      Hope this helps,
      Chris

      Reply
  2. Danielle Pacaud

    Hi Chris I am age 66. I have very little super (about 50k) and my sole asset is my house, which includes an Airbnb flat. I have a mortgage owing of c80k. My Airbnb earnings can be quite comfortable, (60k in 2019 -apart from Covid). It is a redraw mortgage so I can redraw a further c$80k. I live on the edge of Hobart which is somewhat bushfire prone. This causes me a bit of anxiety because, although I have insurance, if my house burnt down I’d have no where to live, no income, and no funds to rebuild until an insurance claim was settled… then there is the time it takes to build. So I had a thought to redraw funds from my mortgage and put that into my super over summer. Then put it back after the bushfire season is over. Is that OK? I could just take $25k. Or I could take $80k. Then can I take the money out of Super and put it back into the mortgage account in the autumn? I believe this incurs no charges. Is there any danger of incurring tax?

    Reply
    • Chris Strano

      Hi Danielle,
      I think the strategy you propose might be adding more complexity than is necessary. If I were you I would consider asking your bank about how a similar outcome could be achieved using a mortgage offset account and see if that option might relieve some anxiety. Ask your lender about any fees and risks associated.
      Regards,
      Chris

      Reply
  3. John Utama

    Really good article. I’m in the process of converting from the accumulation to the pension phase. After reading your article I’m really concerned about risking my life insurance policy in the SMSF fund. You noted in your article,…’ you may want to leave some or all of your super in the accumulation phase.’, could you be more specific, how much is ‘some’? When I’m in the pension phase, I intend to withdraw the minimal amount from the SMSF, ie the earnings of the SMSF, and not touching the capital (commercial properties). Similarly, does it apply to the $25k concessional contribution? Thank you.

    Reply
    • Chris Strano

      Hi John, losing insurance by switching from an accumulation account to a pension account does not apply to SMSFs, as you are not closing down an account, as such. When switching to pension phase within an SMSF, the insurance policy will usually continue to be owned by the SMSF and the premiums will continue to be paid from the SMSF bank account. However, you should consult the SMSF trust deed and discuss the implications of switching to pension phase with your accountant. Generally, ‘some’ refers to enough to continue to cover insurance premiums for, say, at least 2 years, with the intention of topping up the accumulation account regularly, so that premiums can continue to be funded – otherwise the policy risks lapsing. Again, this is more relevant to non-SMSFs.
      Regards,
      Chris

      Reply
  4. Harold Pirotta

    Hi Chris,Thanks for your great tips you give on your site.I was born in May 1960.In August 2020 stopped working and retired after working for a small business as part time(15-20 hours per week) for 3 years .In October 2020 changed most of my Super into a Based Account income stream,getting 4% income.My last employer recently contacted me and needs my assistance to help run the business.
    Not sure if the rules allows me to go back,and work with the same last employer,as part time or even casual.
    Thanks for your assistance
    Harold

    Reply
    • Chris Strano

      Hi Harold,
      Thank you for your kind comments.
      One definition of retirement for superannuation purposes is ceasing an employment arrangement after reaching age 60.
      If you genuinely ceased an employment arrangement with your former employer in August 2020 with no arrangement to return, then it is likely you satisfied the condition of release. This means you should be free to return (casual/part-time/full-time), because your intentions to cease the arrangement back in August were genuine and followed the natural process of ending the relationship. Further, your existing account based pension can remain in place and does not need to be rolled back to accumulation phase.
      This is general information only. If you would like to consider personal advice, feel free to arrange a complimentary 15-min appt with us here to see if personal advice would be beneficial to you and your situation https://calendly.com/torowealth/15mincall
      Regards,
      Chris

      Reply

Submit a Comment

Your email address will not be published. Required fields are marked *