What happens to the balances in OA and SA after RA is created?

[metamofia89]

As per title. My dad is 65 this year (born in 1954). I assume his OA and SA balances were transferred to his RA 10 years ago.

My dad has been working till now so he has some balanced in his SA. Can I know where this SA can go? I want to assume he already withdraw $5k since his balance didn’t meet BRS when RA is created.

Basically I want to know if the OA and SA balances can go to his RA in 2019?

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[BBCWatcher]

Basically I want to know if the OA and SA balances can go to his RA in 2019?

He can certainly do that, and CPF will help him make that direct transfer as a convenience. If his Retirement Account is bigger, then his monthly retirement income is bigger, too. (Bigger for life if he chooses CPF LIFE.)

However, if his Retirement Account is still below the Full Retirement Sum then it could very well be more sensible if somebody (or somebodies) can collect some tax relief (i.e. free money from the government) by making cash top ups to his Retirement Account. That top up cash could come from CPF withdrawals, actually, if there's no other/better source of top up funds. ("Better" here means some pile of cash that's earning less interest than his CPF funds.)

 

[metamofia89]

He can certainly do that, and CPF will help him make that direct transfer as a convenience. If his Retirement Account is bigger, then his monthly retirement income is bigger, too. (Bigger for life if he chooses CPF LIFE.)

However, if his Retirement Account is still below the Full Retirement Sum then it could very well be more sensible if somebody (or somebodies) can collect some tax relief (i.e. free money from the government) by making cash top ups to his Retirement Account. That top up cash could come from CPF withdrawals, actually, if there's no other/better source of top up funds. ("Better" here means some pile of cash that's earning less interest than his CPF funds.)

Noted. I’ll check how much he has in his RA later. But confirm won’t make the BRS for sure.

Just wanted to know if the transfer from OA and SA to RA happen only once, i.e. 55 years old. His 65th birthday is this month. So I can ask CPF to transfer the current SA balance to his OA? Can’t do it online I assume?

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[BBCWatcher]

Just wanted to know if the transfer from OA and SA to RA happen only once, i.e. 55 years old.

Yes. There are sometimes certain OA/SA withdrawal restrictions, but automatic Retirement Account funding is a one-time event on one's 55th birthday.

His 65th birthday is this month. So I can ask CPF to transfer the current SA balance to his OA? Can’t do it online I assume?

I think you mean transfer SA to RA, right? He can do that, but I'm making the point that he shouldn't. He's better off withdrawing then immediately redepositing into his RA. You mentioned he's been working this year, so presumably he would qualify for some tax relief with a cash top up of his Retirement Account. Indeed, qualified family members (you for example) can do the same thing, and so there's plenty of possible tax relief to go around.

If CPF performs a transfer from SA/OA to RA, there's no tax relief. Yes, this is weird, but armed with a little bit of knowledge you, other eligible family members, and/or your father can win some tax relief -- free money from the government -- AND still push exactly the same number of additional dollars into his Retirement Account.

 

[metamofia89]

I think you mean transfer SA to RA, right? He can do that, but I'm making the point that he shouldn't. He's better off withdrawing then immediately redepositing into his RA. You mentioned he's been working this year, so presumably he would qualify for some tax relief with a cash top up of his Retirement Account. Indeed, qualified family members (you for example) can do the same thing, and so there's plenty of possible tax relief to go around.

If CPF performs a transfer from SA/OA to RA, there's no tax relief. Yes, this is weird, but armed with a little bit of knowledge you, other eligible family members, and/or your father can win some tax relief -- free money from the government -- AND still push exactly the same number of additional dollars into his Retirement Account.

Sorry. OA and SA to RA I meant. You mean he can withdraw the balances in his SA now? I’m confused. My understanding is he could have drawn all his remaining CPF savings, $5k since he didn’t make it to BRS.

Also, he can transfer his SA to his RA now + me and him topping up his RA to gain our individual tax reliefs. Am I right?

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[maple96]

As per title. My dad is 65 this year (born in 1954). I assume his OA and SA balances were transferred to his RA 10 years ago.

My dad has been working till now so he has some balanced in his SA. Can I know where this SA can go? I want to assume he already withdraw $5k since his balance didn’t meet BRS when RA is created.

Basically I want to know if the OA and SA balances can go to his RA in 2019?

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I just want to warn u, pls dun rush to do things, do your own due diligence as not all the answers given are correct. It is end of day, time for me to rest, I am too tired to write more, will be back tomorrow. Or u wait for others to comment, dun rush.

 

[metamofia89]

I just want to warn u, pls dun rush to do things, do your own due diligence as not all the answers given are correct. It is end of day, time for me to rest, I am too tired to write more, will be back tomorrow. Or u wait for others to comment, dun rush.

Noted. Not in a rush. Just want to clarify first.

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[henrylbh]

As per title. My dad is 65 this year (born in 1954). I assume his OA and SA balances were transferred to his RA 10 years ago.

My dad has been working till now so he has some balanced in his SA. Can I know where this SA can go? I want to assume he already withdraw $5k since his balance didn’t meet BRS when RA is created.

Basically I want to know if the OA and SA balances can go to his RA in 2019?

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Maple is right that not all answers given are correct.

Q1. If he has not met FRS/BRS and if he continues to work, his CPF contributions will continue to go into his 3 accounts and remain there. MA will overflow into RA, if BHS is met.

Q2. If he has not met FRS/BRS with property charge, he has no choice
All SA/OA will go into RA to meet 'shortfall', if he tries to withdraw them

 

[maple96]

As per title. My dad is 65 this year (born in 1954). I assume his OA and SA balances were transferred to his RA 10 years ago.

My dad has been working till now so he has some balanced in his SA. Can I know where this SA can go? I want to assume he already withdraw $5k since his balance didn’t meet BRS when RA is created.

Basically I want to know if the OA and SA balances can go to his RA in 2019?

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Uncle Henry is correct.

1. Your dad born in DEC 1954, so should be under RSS. But if he had opted to join CPF Life anytime after 55 to get the join bonus, he might be under CPF Life. So check his CPF Statement/Online whether it shows he is under CPF Life and which CPF Life Plan he chose.

2. He will be 65 this mth, so he should have received a letter from CPFB telling him what to do. Or did he meet up with CPFB a few mths ago to discuss (CPFB supposed to arrange, not sure when they started this “new” procedure).

a. If he is under CPF Life, letter will ask him if he wants to defer payout, ignore then payout starts 65. (those born in 1958 or after, there will be another auto transfer from SA/OA to RA 6 mths before 65 if FRS not met. No info about others).

b. If he is under RSS, letter will ask him if he wants to start payout at 65, then he has to reply or go online to reply.

3. If he did not meet FRS (if he turned 55 after July 2009, FRS 117k) at 55, whenever he request to withdraw monies from CPF, CPF will transfer monies from SA/OA to RA before allowing him to withdraw. So if he had done it before 2019 Dec, u can see these in his CPF statements. So CPFB “auto” transfer from SA/OA to RA is not one time only at 55 for his case.

4. If he wants more monies in RA for retirement (to get higher payout), he can transfer SA then OA to RA anytime up to ERS. Or he can do cash topup. If his salary is low, saving income tax maybe a non-issue.

5. U can also topup his RA with your CPF transfers if u qualify or with cash topups to get tax relief if he had not hit FRS. All cash topups will go to his nominated beneficiaries, so U also have to take this into consideration. Before u topup, make sure u know the difference between RSS and CPF Life, and which one he is on/will opt in.

6. So discuss with your dad, what are your plans for his retirement income, his CPF monies, his survival, etc, all else going forward.

7. Until u have more certain answers to the above, I reserve comments on future matters from here. This is not the end of CPF matters for him/you.

 

[henrylbh]

Sorry. OA and SA to RA I meant. You mean he can withdraw the balances in his SA now? I’m confused. My understanding is he could have drawn all his remaining CPF savings, $5k since he didn’t make it to BRS.

Also, he can transfer his SA to his RA now + me and him topping up his RA to gain our individual tax reliefs. Am I right?

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Besides cash topping ups, he can transfer all his SA (and OA) to RA since he has not met FRS/BRS with property charge at anytime.

Whether he can withdraw his SA (and followed by OA) would depend on the rules applicable to his cohort. Certainly not all can be withdrawn. Check with CPF.

 

[metamofia89]

Thanks guys for taking your time to respond to my queries.

So I logged into my dad’s CPF yesterday and this is what I found:

a.) He made his CPF withdrawal in 2015 which was $3k+ as he failed to meet BRS with property charge.

b.) Apprently his SA has depleted since the last time I checked and his RA has increased by a lot. So I assume the SA has been transferred to his RA at least 6 months prior to yesterday. So his RA now has around $40k plus.

c.) I also came across this term in the CPF website called shortfall of $20k plus. What is this? Above this statement there is another line saying meet the requirement of $117k which is the FRS as mentioned by Maple. The shortfall part is really confusing. Would be really thankful if someone can explain to me this or provide me with the resources that explains this.

d.) Talked to my dad about his payout plan and he said he don’t need to receive the payout now. I told him if he needs to start his payout I can help him to apply through CPF online. The monthly payout is also shown in the CPF account. As of today if opted, he will get around $280+ monthly until his RA depleted. Which is around 12 years.

e.) What is the minimum sum he should have in his RA if he wants to enrol into CPF life? This is the only info I can find in the net: If you were born in 1958 and after, and have at least $60,000 in your Retirement Account six months before you reach the age where you can receive payouts (age 65 or later), you are automatically enrolled in CPF LIFE.

My dad was born before 1958. So will it be $60k minimum still? Assuming he can top up to $60k for his RA, will now be too late to opt for CPF LIFE since it says “6 months before turning 65”?

One more info, my dad has met his BHS for his age cohort of $57.2k.

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[henrylbh]

Born before 1 January 1958

You are on the Retirement Sum Scheme and can receive monthly payouts starting from your payout eligibility age until your Retirement Account balances are exhausted.

Alternatively, you can choose to join CPF LIFE to enjoy a lifelong income. You can make your application to join CPF LIFE anytime between your payout eligibility age and one month before age 80.

Q Is there a minimum amount I need before I can join CPF LIFE?
A There is no minimum amount for joining CPF LIFE. However, the amount of retirement sum which you have set aside in your Retirement Account for CPF LIFE would affect your monthly payout amount. If you join with more savings, you will receive a higher payout.

 

[henrylbh]

If he intends to withdraw SA/OA in future including future working contributions, certain rules apply and that's confusing to me All may go into RA if condition is not met for withdrawal.

But if he is certain that he will never need to withdraw his SA and OA, including future working contributions, move all to RA without further delay. Else he is losing interest on the OA balance.

Then take time to decide whether to remain under RSS (by default) or CPFL and when he wants to commence payout between 65 and 70.

 

[maple96]

b.) Apprently his SA has depleted since the last time I checked and his RA has increased by a lot. So I assume the SA has been transferred to his RA at least 6 months prior to yesterday. So his RA now has around $40k plus.

c.) I also came across this term in the CPF website called shortfall of $20k plus. What is this? Above this statement there is another line saying meet the requirement of $117k which is the FRS as mentioned by Maple. The shortfall part is really confusing. Would be really thankful if someone can explain to me this or provide me with the resources that explains this.

Suggest u either meet up with CPFB or email them what this shortfall of 20k means.

e.) What is the minimum sum he should have in his RA if he wants to enrol into CPF life? This is the only info I can find in the net: If you were born in 1958 and after, and have at least $60,000 in your Retirement Account six months before you reach the age where you can receive payouts (age 65 or later), you are automatically enrolled in CPF LIFE.

My dad was born before 1958. So will it be $60k minimum still? Assuming he can top up to $60k for his RA, will now be too late to opt for CPF LIFE since it says “6 months before turning 65”?

One more info, my dad has met his BHS for his age cohort of $57.2k.

Uncle henry had provided the CPF website info, Yes he can opt to join CPF Life anytime after 65 with any amt.

d.) Talked to my dad about his payout plan and he said he don’t need to receive the payout now. I told him if he needs to start his payout I can help him to apply through CPF online. The monthly payout is also shown in the CPF account. As of today if opted, he will get around $280+ monthly until his RA depleted. Which is around 12 years.

Talk to CPFB, if he opt to join CPF Life, how much will he get in mthly payout for Basic vs Standard, compared to RSS. Also ask what will happen to any balances in OA/SA when he join CPF Life and start payout at 65, ie will it be transferred to RA.

I believe after he join CPF Life and start payout at 65, his monies in OA/SA will be "safe", ie CPF will not take it in future.

 

[henrylbh]

I think he still need to make good the shortfall even if he joins CPFL.

Also the shortfall is not 20k that he said. Depending on how much he has, he is allowed to take out up 30% of ...... (I think) and the rest will go RA for RSS or CPFL.

 

[maple96]

I think he still need to make good the shortfall even if he joins CPFL.

Also the shortfall is not 20k that he said. Depending on how much he has, he is allowed to take out up 30% of ...... (I think) and the rest will go RA for RSS or CPFL.

I saw a case, that's why I wrote, once join CPF Life and start payout, the RA amt is locked/reserved for CPF LIfe. He has to confirm all these with CPFB, including any balance in OA/SA at time CPF confirms/issue the policy.

If he stay with RSS, I have no idea what will happen.

From CPFB website:

If you were born before 1958, your withdrawable amounts are computed as follows:

1954

40% of your Special Account and Ordinary Account savings, and any remaining balances after setting aside your Full Retirement Sum* in your Retirement Account.


Q I cannot meet my Full Retirement Sum. Do I need to top up my CPF account with cash?
A
If you do not have your Full Retirement Sum in your Retirement Account, you do not need to top up your Retirement Account with cash out-of-pocket. However, do note that setting aside a lower retirement sum will result in lower monthly payouts from your payout eligibility age.

If you receive any new CPF contributions, government top-ups or other refunds in your CPF account after age 55, part or all of these amounts will be transferred to your Retirement Account on your next withdrawal, to top it up to your Full Retirement Sum, or your Basic Retirement Sum if you own a property.

(My comments: it does not say when this will end, CPF Life join/payout start should end this cos there is a min sum for default joining at pea, but if u cannot meet this min sum, u still can opt in to end the "agony' )

 

[diediex]

d.) Talked to my dad about his payout plan and he said he don’t need to receive the payout now. I told him if he needs to start his payout I can help him to apply through CPF online. The monthly payout is also shown in the CPF account. As of today if opted, he will get around $280+ monthly until his RA depleted. Which is around 12 years.

Kinda weird because my dad (65 next yr) also has around 40K in his RA, and in his CPF letter it states that he will receive $250 for 27 years.

I have assumed that the minimum payout for RSS is $250 and this amount will only increase if RA with interest can last to age 95 (changed to age 90 very recently) first.

 

[henrylbh]

to add to the confusion, I have 2 uncles, each getting a few dollars from CPF every month. At most $13

 

[henrylbh]

According to CPF Board's ARE YOU READY? the minimum payout is $250 a month.

 

[metamofia89]

Kinda weird because my dad (65 next yr) also has around 40K in his RA, and in his CPF letter it states that he will receive $250 for 27 years.

I have assumed that the minimum payout for RSS is $250 and this amount will only increase if RA with interest can last to age 95 (changed to age 90 very recently) first.

Sorry for not explaining earlier in my post. The amount is reflected on the CPF website. The years I self calculate. Took the current RA total divide by the monthly pay out.

Hmm for your dad’s case, it seems like the total payout turns out to be $81k if it’s $250 monthly for 27 years. How come ah?

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