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Devotee

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Still trying to get my head around Transition to Retirement.

 

I am currently only earning about $13,000 pa but have about $300,000 in super.

 

What I would like to do in 2 years, once I turn 58 (Preservation Age) is to receive an income stream of about $10-15,000 pa until I am about 60+

 

As I am not currently paying tax, I would like to minimise and prevent any additional tax being paid.

 

Once I turn 58, what exactly happens?

 

Do I request for about $20-30,000 to be put into a TTR account from my super fund and then have that pay me in weekly/fortnight instalments until 60+ and then get an income stream/lump sum from my main super account? or do they draw x% from the super periodically?

 

I know that part of that super paid to me between preservation age and 60 will be taxed at 0% from a taxed element and my marginal tax rate (19%) less 15% tax offset

 

Just looking at my options to receive a little more without having to pay tax.

 

Can't see the point in paying unnecessary tax if I don't need to, just to improve, slightly, my quality of life.

 

Any benefits to withdrawing it as a lump sum payment?

 

Just trying to create what-if scenarios in a spreadsheet Smiley Happy

 

 

 

 

 

1 ACCEPTED SOLUTION

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Best answer

Devotee Registered Tax Practitioner

Replies 1

Do I request for about $20-30,000 to be put into a TTR account from my super fund and then have that pay me in weekly/fortnight instalments until 60+ and then get an income stream/lump sum from my main super account? or do they draw x% from the super periodically?

 

Assuming the member is not retired:

 

1.  Member requests that trustees start a transition to retirement income stream(TRIS) with the balance of accum account or a specific amount, say $ 300,000.

 

2.  Trustees minute the request and approval

 

3.  Trustees notify member of approval and terms.

 

4.  Terms will include pension min and max.

 

min  =  $ 300,000 x 4% x  (days remaining in 2019-20)/365

max  =  $ 300,000  x  10%     (no pro-rate)

 

5.  The fund trustees transfer $ 300,000 from accum to a new pension account

 

6.  income stream requires at least 2 payments during its total duration  -  means that an income stream that is stopped after only one payment is not an income stream.

 

If the member is retired, or has passed some other condition of release, then a TRIS would not be necessary  -  go straight to ABP instead.

 

I know that part of that super paid to me between preservation age and 60 will be taxed at 0% from a taxed element and my marginal tax rate (19%) less 15% tax offset

 

If the $ 300,000 has components taxed $ 240,000 and tax free $ 60,000, the the pension account will be taxed 80% and tax free 20% for the life of the pension.  Under age 60, the taxed element is taxable at the member's marginal rate, but there is a non-refundable offset which is (taxable part) x 15%.

 

Any benefits to withdrawing it as a lump sum payment?

 

Yes, if under age 60  -  tax free on first $ 185 K.

 

But  -  neither preservation age nor age 60 are a condition of release in themselves so the preservation status of the account has not changed.  This means no lump sums unless you already have an unpreserved amount in the member balance.

 

If you have a unpreserved amount, you would not put that into a TRIS  -  you would put it into an ABP, or just draw out as series of LSP amounts.

 

 

 

 

 

2 REPLIES 2

Best answer

Devotee Registered Tax Practitioner

Replies 1

Do I request for about $20-30,000 to be put into a TTR account from my super fund and then have that pay me in weekly/fortnight instalments until 60+ and then get an income stream/lump sum from my main super account? or do they draw x% from the super periodically?

 

Assuming the member is not retired:

 

1.  Member requests that trustees start a transition to retirement income stream(TRIS) with the balance of accum account or a specific amount, say $ 300,000.

 

2.  Trustees minute the request and approval

 

3.  Trustees notify member of approval and terms.

 

4.  Terms will include pension min and max.

 

min  =  $ 300,000 x 4% x  (days remaining in 2019-20)/365

max  =  $ 300,000  x  10%     (no pro-rate)

 

5.  The fund trustees transfer $ 300,000 from accum to a new pension account

 

6.  income stream requires at least 2 payments during its total duration  -  means that an income stream that is stopped after only one payment is not an income stream.

 

If the member is retired, or has passed some other condition of release, then a TRIS would not be necessary  -  go straight to ABP instead.

 

I know that part of that super paid to me between preservation age and 60 will be taxed at 0% from a taxed element and my marginal tax rate (19%) less 15% tax offset

 

If the $ 300,000 has components taxed $ 240,000 and tax free $ 60,000, the the pension account will be taxed 80% and tax free 20% for the life of the pension.  Under age 60, the taxed element is taxable at the member's marginal rate, but there is a non-refundable offset which is (taxable part) x 15%.

 

Any benefits to withdrawing it as a lump sum payment?

 

Yes, if under age 60  -  tax free on first $ 185 K.

 

But  -  neither preservation age nor age 60 are a condition of release in themselves so the preservation status of the account has not changed.  This means no lump sums unless you already have an unpreserved amount in the member balance.

 

If you have a unpreserved amount, you would not put that into a TRIS  -  you would put it into an ABP, or just draw out as series of LSP amounts.

 

 

 

 

 

Devotee

Replies 0

@Bruce4Tax 

 

Thanks

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