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Old 11-04-2019, 07:30 PM   #1154
BBCWatcher
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Join Date: Jun 2010
Posts: 10,143
1. I can top up my mums RA up to the enhanced retirement sum at any time, although tax relief for me is capped at 7k contribution/year.
That’s correct. Her first $30,000 in combined balances will earn 6% interest, the next $30,000 will earn 5%, and additional RA/SA/MA dollars will earn 4%. OA earns 2.5%.

2. At any point before 79 years and 10 months old, she can choose to join CPF life (even with RA < BRS). But to do so, i assume she has to inform CPF specifically about it, otherwise she will not be automatically put to CPF life even her RA hits the BRS before 65?
There’s a $60,000 threshold for “mandatory” participation in CPF LIFE. But yes, she should inform CPF before age 70 what she’d like to do.

2. At any time, on top of the RA top up, I am also allowed to make "all three" cpf top up to her OA/SA/MA at $37,740 per year, earning 2.5%/4%/4% interest (assuming I've placed more than FRS in her RA), although without any tax benefits.
That’s correct.

It’s also possible to make directed MA top ups, also with no tax relief (since she doesn’t qualify for her own tax relief). MA top ups must also fit within the CPF Annual Limit and they must fit within the Basic Healthcare Sum (BHS), currently $57,200.

3. At any time after her RA balance is more than FRS, she will be able to "withdraw" cash from her OA/SA freely, although any deposits will have to be made to "all three" accounts (up to $37,740/yr) and MA money can only be used for designated medical purposes. (Not sure when u said her OA/SA can be used like a bank account, does it mean that cash deposits can be made only to SA account, therefore earning 4% interest and nothing will flow into her MA?)
Once her MA hits the BHS — which is fixed on her 65th birthday, by the way (no more increases) — an “all three” deposit will flow only to her OA and SA. And, assuming her CPF LIFE participation is funded well enough, OA+SA then turns into a weirdly high yielding (>2.5%) on demand savings account for her, yes.

May I know if you think my understanding is correct?
Yes, I think you’ve got it.

In summary, and cash permitting, newly minted PRs really ought to zoom up their CPF balances. It’s a great deal.
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