How can SMSF and industry super combine to start $1.7m pension?

  • 📰 FinancialReview
  • ⏱ Reading Time:
  • 57 sec. here
  • 2 min. at publisher
  • 📊 Quality Score:
  • News: 26%
  • Publisher: 90%

Nigeria News News

Nigeria Nigeria Latest News,Nigeria Nigeria Headlines

The general preference where someone has multiple funds is to maximise super from accounts with the highest tax-free component as beneficiaries will pay less tax.

Q: I have a friend with $1.1 million in an industry super fund that is all from concessional contributions except for $3000 in an after-tax account that was due to an excess contribution. He also has $800,000 in an SMSF that is all after-tax contributions invested in ASX-listed shares. He is planning to retire next year and would like to organise a pension using the $1.7 million limit.

The first thing to consider, says Philip La Greca, a technical and strategic services manager with SMSF service provider SuperConcepts, is the tax components of the different accounts. This can affect any tax payable where a retiree is under 60 as well as any potential tax on the member’s death where the benefit is paid to someone who is not a dependant of the member.

Someone who is not a dependant, like an adult child who is self-sufficient or the beneficiary of super through an estate, is entitled to inherit tax-free super with no tax, whereas a taxable super component is liable for 17 per cent tax. The reason for preferring to start a pension from an account with a higher tax-free proportion is twofold. When you start a pension, you lock in the tax-free proportion at the commencement date and this ratio applies to any payment out of that account balance in the future. This could be a lump sum or a death benefit.

Regarding your question on the minimum drawdown rates, these only apply to the pension accounts: the $800,000 in the SMSF and the $900,000 in the industry fund, says La Greca.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 2. in NG

Nigeria Nigeria Latest News, Nigeria Nigeria Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Ardent Leisure sells US entertainment business for $1.1bThe sale of the profitable Main Event business will leave Ardent with just its Australian theme parks, including Dreamworld on the Gold Coast.
Source: FinancialReview - 🏆 2. / 90 Read more »