CPF Top up questions

[o2atom]

If I top up my medisave to 60k on 1st Jan. Will the interest for 2019 go to my SA instead?

It depends on how much you have in your MA on 31-Dec-19. Not 01-Jan-20.
If the amount in your MA is $57,200, the interest for 2019 will flow to SA. If your SA has reached FRS, it will flow to OA.

 

[kehyi4]

Anyone knows how long it takes for MA voluntary contribution to go through? According to the CPF site, payments via PayNow QR application will be processed almost instantly. Does it mean it's instant? Or still gotta wait 2-3 working days after the "application"?

When i topped up my MA recently via PayNow QR, it appeared in my CPF balance straightaway, so yeah "almost instantly" seems correct. Do note: i did it on a business day

 

[lupster]

When i topped up my MA recently via PayNow QR, it appeared in my CPF balance straightaway, so yeah "almost instantly" seems correct. Do note: i did it on a business day

Thank you!

 

[henrylbh]

Thank you!

Try $1 top up to see result.

 

[daniel92]

quick question regarding amount that can be voluntarily topped up to Medisave as a result of the CPF Annual Limit and which can still qualify for income tax relief...

if my employer normally pays my CPF contribution in the 2nd/3rd week of the following month (e.g., Dec 2019 contributions (including on annual bonus) paid in 2nd/3rd week of Jan 2020), will the Dec 2019 contributions be included when determining the max amount that can be contributed to Medisave for tax relief on income earned in 2019?

currently on the "check allowable contributions" page, it of course only includes contributions for employment in Jan-Nov 2019 and not for Dec 2019...

the CPF page for the voluntary contribution states: "* If there are other contribution being processed before this payment, the Voluntary Contribution may exceed the CPF Annual limit/Member’s Basic Healthcare Sum and will be refunded without interest." ... which seems like if the contribution is only entered in Jan 2020, it wouldn't be counted?

many thanks!

 

[BBCWatcher]

quick question regarding amount that can be voluntarily topped up to Medisave as a result of the CPF Annual Limit and which can still qualify for income tax relief...

if my employer normally pays my CPF contribution in the 2nd/3rd week of the following month (e.g., Dec 2019 contributions (including on annual bonus) paid in 2nd/3rd week of Jan 2020), will the Dec 2019 contributions be included when determining the max amount that can be contributed to Medisave for tax relief on income earned in 2019?

currently on the "check allowable contributions" page, it of course only includes contributions for employment in Jan-Nov 2019 and not for Dec 2019...

the CPF page for the voluntary contribution states: "* If there are other contribution being processed before this payment, the Voluntary Contribution may exceed the CPF Annual limit/Member’s Basic Healthcare Sum and will be refunded without interest." ... which seems like if the contribution is only entered in Jan 2020, it wouldn't be counted?

That’s a really great question. You’re free to run this experiment, and if it doesn’t work at most it’ll only cost you the equivalent of about two months of interest since that’s about how long it’ll take CPF to return any excess, without interest. Why not give it a try and let us know how it goes?

 

[henrylbh]

You also want to know, then you should also try haha.

 

[a4973]

How will VC be allocated for above 55 with RA above FRS below ERS & MA at BHS?
TIA

 

[maple96]

How will VC be allocated for above 55 with RA above FRS below ERS & MA at BHS?
TIA

Just use the CPF allocation tool/calculator at CPF website to see the amts allocated to OA/SA/MA. Since u max MA, the MA portion will automatically go to OA.

 

[maple96]

Dun try to make assumptions just to game the system or find loopholes to exploit

Just use some common-sense or logical thinking to decipher if u have difficulty trying to comprehend the written CPF rules and instructions.

There must be some reasons why CPFB can only refund any excess CPF contributions above the annual limit in late Jan/Feb. Eg. by that time, your Dec mandatory contributions would have been credited to CPF, the CPFB will be able to compute the 2019 annual contribution to determine if there is any excess to be refunded. If it is still not credited, u have found the "Loophole", congrats no refund for u.

But will u get the tax relief? U will have to ask CPFB/IRAS

Note: If u contribute to MA say 7k above the CPF annual limit, 7k will be refunded from OA/SA/MA based on CPF contribution allocation rates.

See my comments in red below:

quick question regarding amount that can be voluntarily topped up to Medisave as a result of the CPF Annual Limit and which can still qualify for income tax relief...

if my employer normally pays my CPF contribution in the 2nd/3rd week of the following month (e.g., Dec 2019 contributions (including on annual bonus) paid in 2nd/3rd week of Jan 2020), will the Dec 2019 contributions be included when determining the max amount that can be contributed to Medisave for tax relief on income earned in 2019?

currently on the "check allowable contributions" page, it of course only includes contributions for employment in Jan-Nov 2019 and not for Dec 2019...

the CPF page for the voluntary contribution states: "* If there are other contribution being processed before this payment, the Voluntary Contribution may exceed the CPF Annual limit/Member’s Basic Healthcare Sum and will be refunded without interest." ... which seems like if the contribution is only entered in Jan 2020, it wouldn't be counted?

This statement/clause is like a disclaimer from CPFB, incase their system show u a wrong amt, or U are doing online contribution, but there might be some contributions on the way not credited yet then the figure computed by the system will be incorrect, etc.

many thanks!

 

[Tiger9119]

How will VC be allocated for above 55 with RA above FRS below ERS & MA at BHS?
TIA

13.46% will go into SA. How much go into OA is depend on what you have in MA.
Max into MA is 40.38%

 

[henrylbh]

13.46% will go into SA. How much go into OA is depend on what you have in MA.
Max into MA is 40.38%

Depends on age bands - 55 to 60, 60 to 65 and above 65. Also depends on whether got MA prior deduction in that month.

 

[Tiger9119]

Depends on age bands - 55 to 60, 60 to 65 and above 65. Also depends on whether got MA prior deduction in that month.

You are right, the percentage I mentioned is for 55-60. For 60-65, the percentage for SA is higher at 15.15%.

 

[dork32]

i get my contribution and allocation rates from this site.
https://www.cpf.gov.sg/Employers/Em...cpf-contribution-and-allocation-rates#Item587

the nice thing is that they are raising the allocation rates form 2021 onwards.

see the following site
https://www.todayonline.com/singapo...ribution-rates-will-increase-about-decade-now

 

[dork32]

now contribution for 55 to 60
SA contribution/Total contribution =3.5/26 = 13.46%

by 2021
SS contribution/Total contribution = 5.5/28 = 19.64%

 

[daniel92]

Dun try to make assumptions just to game the system or find loopholes to exploit

Just use some common-sense or logical thinking to decipher if u have difficulty trying to comprehend the written CPF rules and instructions.

There must be some reasons why CPFB can only refund any excess CPF contributions above the annual limit in late Jan/Feb. Eg. by that time, your Dec mandatory contributions would have been credited to CPF, the CPFB will be able to compute the 2019 annual contribution to determine if there is any excess to be refunded. If it is still not credited, u have found the "Loophole", congrats no refund for u.

But will u get the tax relief? U will have to ask CPFB/IRAS

Note: If u contribute to MA say 7k above the CPF annual limit, 7k will be refunded from OA/SA/MA based on CPF contribution allocation rates.

See my comments in red below:

Not trying to find any loophole to exploit lol - not sure why you would think that. Just trying to see if anyone has encountered this issue so I can plan my voluntary contributions accordingly (including the allocations to SA/MA if I want to avoid the refund scenario).

 

[wahsmlj]

Dear gurus, I have a question from a tax reduction perspective.

I am 31 years old
Current MA = 50,000
I note that the BHS for 2020 is 60,000

If I choose to top up my MA in Dec, my MA will reach 55,759.52 naturally (50K + 479.96 x 12) at end of the year. And this means I can top up 4240.48 to reach BHS. My understanding is that this 4240.48 is tax deductible.

Questions:
1. If instead, on Jan 1 2020, I top up 10,000 to MA to reach BHS, this 10,000 is tax deductible for the coming year right right?
2. Post topping up 10,000 (and reaching the BHS of 60,000), the MA contribution will flow into my SA going forward right?
3. Will this result in 5,759.52 being refunded in 2021 because that 5,759.52 should be in the MA anyway and the right limit is 4240.48? Or any other amount will be refunded?

Thank you very much for all your sagely advice!

 

[BBCWatcher]

Dear gurus, I have a question from a tax reduction perspective.

I am 31 years old
Current MA = 50,000
I note that the BHS for 2020 is 60,000

If I choose to top up my MA in Dec, my MA will reach 55,759.52 naturally (50K + 479.96 x 12) at end of the year. And this means I can top up 4240.48 to reach BHS. My understanding is that this 4240.48 is tax deductible.

I think I understand, but let’s just say that right now (within December, 2019) you can add up to $7,200 to your MediSave Account if you have at least that much room below the CPF Annual Limit. Then, within January, 2020 (and if you can beat your monthly payroll cycle into CPF), you can add up to another $2,800 to your MediSave Account, again assuming that amount fits within the CPF Annual Limit in 2020.

Questions:
1. If instead, on Jan 1 2020, I top up 10,000 to MA to reach BHS, this 10,000 is tax deductible for the coming year right right?

Yes, the $10,000 would be subtracted from your taxable income for 2020, generating some tax savings in 2021. But if you can do $7,200 now and $2,800 in January, you enjoy most of the tax savings a full year earlier and you earn MA interest on $7,200 starting at least a month earlier. You also start filling your Special Account to the Full Retirement Sum once your MA is pegged at the Basic Healthcare Sum because the portion of your compulsory contributions earmarked for MA starts overflowing into SA. And you reduce the slight risk you won’t have enough room below the CPF Annual Limit in 2020 if something “strange” happens, like a salary bump and bonus.

The only reasons you’d wait are because you simply don’t have any cash right now or because you cannot get any good tax relief now (for actions you take within 2019).

2. Post topping up 10,000 (and reaching the BHS of 60,000), the MA contribution will flow into my SA going forward right?

Up to the Full Retirement Sum, yes.

3. Will this result in 5,759.52 being refunded in 2021 because that 5,759.52 should be in the MA anyway and the right limit is 4240.48? Or any other amount will be refunded?

Refunds only happen with MA top ups when you exceed the CPF Annual Limit.

Any reason(s) why you wouldn’t do $7,200 now and $2,800 in January?

 

[wahsmlj]

I think I understand, but let’s just say that right now (within December, 2019) you can add up to $7,200 to your MediSave Account if you have at least that much room below the CPF Annual Limit. Then, within January, 2020 (and if you can beat your monthly payroll cycle into CPF), you can add up to another $2,800 to your MediSave Account, again assuming that amount fits within the CPF Annual Limit in 2020.


Yes, the $10,000 would be subtracted from your taxable income for 2020, generating some tax savings in 2021. But if you can do $7,200 now and $2,800 in January, you enjoy most of the tax savings a full year earlier and you earn MA interest on $7,200 starting at least a month earlier. You also start filling your Special Account to the Full Retirement Sum once your MA is pegged at the Basic Healthcare Sum because the portion of your compulsory contributions earmarked for MA starts overflowing into SA. And you reduce the slight risk you won’t have enough room below the CPF Annual Limit in 2020 if something “strange” happens, like a salary bump and bonus.

The only reasons you’d wait are because you simply don’t have any cash right now or because you cannot get any good tax relief now (for actions you take within 2019).


Up to the Full Retirement Sum, yes.


Refunds only happen with MA top ups when you exceed the CPF Annual Limit.

Any reason(s) why you wouldn’t do $7,200 now and $2,800 in January?

Apologies I missed an important point. I've already topped up my CPF-MA this year (a total of 11.1K, which is the max in this year for me). The 50K is amount post MA-top up.

I am reviewing the year and planning ahead in terms of tax deduction, hence the question of adding 10K in Jan, which I'll do ahead of the monthly payroll cycle to reduce taxes straight away + maximizing chances of hitting FRS earlier.

Thank you very much BBCWatcher.

 

[maple96]

There are some ambiguities or unclear information in your query. I will make some assumptions with clarifications in red below in order to answer your questions.

Dear gurus, I have a question from a tax reduction perspective.

I am 31 years old
Current MA = 50,000
I note that the BHS for 2020 is 60,000

If I choose to top up my MA in Dec (2020), my MA will reach 55,759.52 naturally (50K + 479.96 x 12) at end of the year (2020). This is from your employer based on salary?
U have not included interest on MA to be credited on Dec 31 2019? For sake of discussion, I will assume your MA balance at 50k is as at Jan 1 2020.

And this means I can top up 4240.48 to reach BHS for 2020. ( if u have other deductions like Isp premiums, u have more room, I assume none for now).

My understanding is that this 4240.48 is tax deductible.
(No, it depends. For tax relief purposes, pls read the rules from IRAS website below)


Questions:

1. If instead, on Jan 1 2020, I top up 10,000 to MA to reach BHS, this 10,000 is tax deductible for the coming year right right?

(No, it depends. For tax relief purposes, pls read the rules from IRAS website below)

2. Post topping up 10,000 (and reaching the BHS of 60,000), the MA contribution will flow into my SA going forward right?

Yes but if SA hit FRS, it will flow into OA.

3. Will this result in 5,759.52 being refunded in 2021 because that 5,759.52 should be in the MA anyway and the right limit is 4240.48? Or any other amount will be refunded?

In Jan 2021, CPFB will calculate your actual mandatory contributions from employment, if this together with the 10k exceed CPF annual limit, the excess will be refunded from OA/SA/MA.


Thank you very much for all your sagely advice!

From IRA website:

Amount of Tax Relief VC-MA

The amount of tax relief given to the*lowest*of the following:

1. Voluntary cash contribution directed specifically to Medisave Account or

2. Annual CPF contribution cap for the year, less Mandatory Contribution (MC)* or

3. Prevailing Basic Healthcare Sum(BHS)^, less the balance in Medisave Account before the voluntary cash contribution.