CPF Top up questions

greddy88

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Yes, you can. However, if your spouse is already in the zero percent tax bracket then there's no tax relief with a MA top-up.

I think it's smarter to maximize available tax reliefs first, before making any MA or SA top-ups that don't qualify for tax relief.


That's true, but it's smarter for the spouse in the higher tax bracket to assume Medisave payable insurance premiums from his/her MA, for the whole household.

My spouse isn't working and I've maxed out mine, and looking for ways to reduce taxable income.

But u said if she's in the zero bracket I can't claim relief?
 

testerjp

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Ok so to put it simply again.

1. If I've topped up SA 10K.
Say I'm with 100K total balance in the SA.
20 years later when i withdraw, assume that BRS remain as 83k
The total amount i can withdraw is 100k-10k-83k(BRS)-(Interest earned from SA topup) = 7k--


2. If I top up my MA 10k and it reaches my BHS limit.
My monthly CPF contribution say is $500 to SA $500 to MA.
Becomes $1000 to SA as the MA is full?
Then all the interest earned in that way in the SA, is withdrawable after - BRS?

Then B should make more sense.

What's the advantage of achieving FRS vs BRS?
 

JuniorLion

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What's the advantage of achieving FRS vs BRS?

You get more monthly payouts from 65 onwards.
If you have a longer lifespan, that translates to higher total payouts.

If you know you're going to die young, then better just do BRS.
 

BBCWatcher

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But u said if she's in the zero bracket I can't claim relief?
Correct. You do not get any tax relief when you top up anybody else's Medisave Account (MA). She does not get any tax relief when she (or anybody else) tops up her MA because she's already in the zero percent tax bracket.

You can get tax relief if you top up her Special Account, if her total worldwide income is less than S$4,000. IRAS provides the details here.
 

BBCWatcher

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If you know you're going to die young, then better just do BRS.
No, it doesn't really work that way. If you're really expecting/planning to die young, the Medisave and Special Account 4+ percent interest and top-up tax reliefs are all still quite lovely...for your nominated heir(s).

"Young" here is at least before age 70, because you can defer CPF LIFE retirement annuity payouts until age 70.
 

greddy88

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Correct. You do not get any tax relief when you top up anybody else's Medisave Account (MA). She does not get any tax relief when she (or anybody else) tops up her MA because she's already in the zero percent tax bracket.

You can get tax relief if you top up her Special Account, if her total worldwide income is less than S$4,000. IRAS provides the details here.


Okay, thanks for the explanation bro.
 

JuniorLion

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No, it doesn't really work that way. If you're really expecting/planning to die young, the Medisave and Special Account 4+ percent interest and top-up tax reliefs are all still quite lovely...for your nominated heir(s).

"Young" here is at least before age 70, because you can defer CPF LIFE retirement annuity payouts until age 70.

Gotta change your way of thinking -- not everyone considers legacy planning where CPF is concerned.
 

testerjp

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Going by the yearly increment of FRS, i think 20 years later, will be close to $300k.
BRS is half of that.

Even if one top up a huge amount , it doesn't look like most can chase this always growing target.

Also another two questions .
1: Since FRS/BRS increases with inflation.
Will the payout amount also be adjusted and go up with inflation?

2. Will the payout age be dragged further and further?
iirc it was 60 yo and now 65-70yo.

It seems to me that aiming for BRS seem safer.
 
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JuniorLion

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Going by the yearly increment of FRS, i think 20 years later, will be close to $300k.
BRS is half of that.

Even if one top up a huge amount , it doesn't look like most can chase this always growing target.

Also another two questions .
1: Since FRS/BRS increases with inflation.
Will the payout amount also be adjusted and go up with inflation?

2. Will the payout age be dragged further and further?
iirc it was 60 yo and now 65-70yo.

It seems to me that aiming for BRS seem safer.

We're not clairvoyant and can't tell the future, but what we can say are with numbers.

1. If BRS = $83000, and payout = $550. Shouldn't it be that:
if BRS = $200000, payout increase accordingly? You expect BRS = $200000 and payout still remains $550? Main question you're asking is if the increase is going to be proportional. For that, no one knows.

2. The limit to human lifespan is approximately 120 years old. Plotting the life expectancy of Singaporean since the 1960s, we can safely say that it will reach around 85+ years old soon. But it will not go up forever. Even if it does, then there's the quality of life to consider. So one one really if it will increase, but I doubt so.

I don't look forward to retirement. I look forward to continue contributing to society while I can.
 

starlight318

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You get more monthly payouts from 65 onwards.
If you have a longer lifespan, that translates to higher total payouts.

If you know you're going to die young, then better just do BRS.

What if one dies before even start withdrawing from CPF Life? For example, age 63, does that mean the beneficiary can take out all money inside RA?

Im now having second thoughts about choosing FRS or BRS since average age of passing for most ppl in my family (grandparents,uncles ) is around 60's only. Only one of my grandparents lived till 88.
 

BBCWatcher

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1: Since FRS/BRS increases with inflation.
Will the payout amount also be adjusted and go up with inflation?
Yes, of course.

2. Will the payout age be dragged further and further?
iirc it was 60 yo and now 65-70yo.
CPF increased the Drawdown Age (now called the Payout Eligibility Age) to 62 before CPF LIFE was introduced. And you have to compare apples to apples here. It was 60 and increased in steps to 65. (There was always an option to defer the payout start date to an older age, and there still is. So it's 60 to 65, period.)

And it's even a little more complicated since the surplus (except Medisave) is available for withdrawal at age 55.

So, will the Payout Eligibility Age increase further? Maybe, but I don't think it'll happen soon. CPF might even introduce something like a FRS-level (but with property pledge) early CPF LIFE payout option at age 62 or 63 -- that could happen, too. Many things are possible, and some of them are realistic.

starlight318 said:
What if one dies before even start withdrawing from CPF Life? For example, age 63, does that mean the beneficiary can take out all money inside RA?
Yes, your nominated heir receives every penny, with interest. In fact, if you don't need the money for your own needs, you can defer your CPF LIFE payout to age 70. Then, if you die before age 70, same thing: your nominated heir receives it all. If you live past your 70th birthday, and if you still don't need the money for your own needs, still no problem: sign up for CPF LIFE Basic, and as the checks roll in simply hand them over to your nominated heir(s) as pre-demise gifts. Whatever residual remains goes to your nominated heir(s), too.

There's absolutely no problem leaving money to heirs, if that's what you want to do (and can afford it).
 
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gizmo_toh

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Hi, need some expert advice. Currently, if my MA is 52k and SA is ardd 180k can i still top up my SA or MA to enjoy tax relief? Thanks
 

starlight318

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Yes, of course.


CPF increased the Drawdown Age (now called the Payout Eligibility Age) to 62 before CPF LIFE was introduced. And you have to compare apples to apples here. It was 60 and increased in steps to 65. (There was always an option to defer the payout start date to an older age, and there still is. So it's 60 to 65, period.)

And it's even a little more complicated since the surplus (except Medisave) is available for withdrawal at age 55.

So, will the Payout Eligibility Age increase further? Maybe, but I don't think it'll happen soon. CPF might even introduce something like a FRS-level (but with property pledge) early CPF LIFE payout option at age 62 or 63 -- that could happen, too. Many things are possible, and some of them are realistic.


Yes, your nominated heir receives every penny, with interest. In fact, if you don't need the money for your own needs, you can defer your CPF LIFE payout to age 70. Then, if you die before age 70, same thing: your nominated heir receives it all. If you live past your 70th birthday, and if you still don't need the money for your own needs, still no problem: sign up for CPF LIFE Basic, and as the checks roll in simply hand them over to your nominated heir(s) as pre-demise gifts. Whatever residual remains goes to your nominated heir(s), too.

There's absolutely no problem leaving money to heirs, if that's what you want to do (and can afford it).

But I thought once the money is paid to.buy an annuity there is a certain amount that you will not get back, beneficiary only gets back the 'bequest amount'?
 

BBCWatcher

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Hi, need some expert advice. Currently, if my MA is 52k and SA is ardd 180k can i still top up my SA or MA to enjoy tax relief?
No.

1. Your Medisave Account has reached the Basic Healthcare Sum (BHS) for 2017 ($52,000), so that's done.

2. Your Special Account has exceeded the Full Retirement Sum (FRS) for 2017 ($166,000), so that's done.

However, you have two other potential, near-term opportunities for CPF-related tax relief:

3. If you have a spouse or other qualified family member, you can likely top up his/her Special Account (or Retirement Account) for tax relief. A spouse qualifies if his/her Special Account/Retirement Account is below the Full Retirement Sum and he/she has a total global income of less than $4,000.

4. On January 1, 2018, the Basic Healthcare Sum will increase to $54,500. You should be able to top up your Medisave Account by $2,500 on January 1, 2018, to qualify for tax relief in 2018 (Year of Assessment 2019). You may also be able to top up your Medisave Account immediately after making a withdrawal (for insurance premiums, for example). All Medisave top-ups must fit within the CPF Annual Limit of $37,740. If your gross salary is at least $6,000/month and if you receive at least $30,000 in variable salary/wages/bonuses (including "13th month" bonus), then you will hit the CPF Annual Limit. If you exceed the CPF Annual Limit, your excess top-up will be refunded without interest.
 

testerjp

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What if one dies before even start withdrawing from CPF Life? For example, age 63, does that mean the beneficiary can take out all money inside RA?

Im now having second thoughts about choosing FRS or BRS since average age of passing for most ppl in my family (grandparents,uncles ) is around 60's only. Only one of my grandparents lived till 88.
Using the cpf life calculator.

Your heirs will receive the full payout.

The terms change and twist so one part I don't understand.
If I've 166k now, can I still request to join the basic plan for the cpf life instead of standard??

As I also see that the bequest amount reduce drastically with the standard plan.
If one reach 166k today , when he is at 80 yo.
His balance he can bequest is $0.
The guy with the basic plan still can have $130k plus.

For basic, the value of $0 left is 91yo.
 

BBCWatcher

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But I thought once the money is paid to.buy an annuity there is a certain amount that you will not get back, beneficiary only gets back the 'bequest amount'?
My understanding is that you can defer buying the CPF LIFE annuity (paying the premium) until age 70. If you die before age 70, every penny goes to your nominated heir(s), with interest. Once you hit age 70 the payouts must start...and you can simply hand those payouts to your heirs. Yes, obviously, if you die while receiving CPF LIFE payouts the residual will be less. Exactly how that math works depends in particular on which payout schedule you choose. ("Basic" is the most bequest-oriented.)

If you want to maximize the bequest, assuming you don't need the money for your own needs and don't plan to commit suicide at age 69.9 (!), then:

(a) Nominate your heir(s), which you should do anyway at any age;
(b) Defer CPF LIFE to age 70;
(c) Choose the CPF LIFE Basic Plan at age 70 (notify CPF before the deadline), at the lowest participation level allowed;
(d) Hand every CPF LIFE annuity payout dollar to your heir(s).

But no, this formula doesn't mean you should "aim for" BRS-level CPF LIFE. Tax relief, high interest rates, and creditor protections are all nice parts of the deal.
 

BBCWatcher

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If I've 166k now, can I still request to join the basic plan for the cpf life instead of standard??
Yes, with a property pledge, you can choose Basic Retirement Sum-level CPF LIFE, and as late as age 70. (The plan choice deadline is 3 weeks before your 70th birthday, I understand.) However, if somebody (including you) made any voluntary top-ups to the Special/Retirement Account, then those top-ups will get added to the BRS-level in order to set your minimum CPF LIFE participation level. Typically top-ups will put you somewhere between BRS-level and FRS-level as your minimum. (You can participate above the minimum, of course -- up to ERS-level.)

Note that OA to SA conversions, and "spillovers" from MA to SA (once your MA hits the Basic Healthcare Sum), are not top-ups. And of course top-ups don't matter at all for these purposes if you don't even hit the Basic Retirement Sum (BRS).
 

ckchia88

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4. On January 1, 2018, the Basic Healthcare Sum will increase to $54,500. You should be able to top up your Medisave Account by $2,500 on January 1, 2018, to qualify for tax relief in 2018 (Year of Assessment 2019). You may also be able to top up your Medisave Account immediately after making a withdrawal (for insurance premiums, for example). All Medisave top-ups must fit within the CPF Annual Limit of $37,740. If your gross salary is at least $6,000/month and if you receive at least $30,000 in variable salary/wages/bonuses (including "13th month" bonus), then you will hit the CPF Annual Limit. If you exceed the CPF Annual Limit, your excess top-up will be refunded without interest.

Must top up on 1 Jan 2018?:s11:
 
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