CPF after 55

[dork32]

might be worth doing MA first.

that's true

yes. money is fungible. but you will likely almost definitely going to hit BHS. so might be worth topping up MA first. then in future any overflow will go to SA and that overflow is not locked.

I disagree,

if this is a one time top up, there is no difference. but ma and sa are earning 4%. there is no difference in the rate of return.
if you top up ma, it will hit bhs earlier. additional contribution will overflow into sa.
if you top up sa, you will hit bhs at a later date. but your sa is larger, so there is no difference.

if you intend to top up a max of 8k a year, then there is also no difference, based on the points above.

if you intend to top up more than 8k a year, then topping you sa is better.
For a normal person, the ma will hit bhs much faster than the sa hit FRS. when this occur, you cannot top up your ma anymore.
If you top up your ma, your ma will hit more quickly. when this occur, you cannot top up more than 8 k anymore.
if you top up your sa, your ma will take a longer time to hit bhs, you can continue to top up more than 8k till you hit bhs.

But there are many people that support amdk. he always encourage ma top up first

 

[demoforce1]

I disagree,

if this is a one time top up, there is no difference. but ma and sa are earning 4%. there is no difference in the rate of return.
if you top up ma, it will hit bhs earlier. additional contribution will overflow into sa.
if you top up sa, you will hit bhs at a later date. but your sa is larger, so there is no difference.

if you intend to top up a max of 8k a year, then there is also no difference, based on the points above.

if you intend to top up more than 8k a year, then topping you sa is better.
For a normal person, the ma will hit bhs much faster than the sa hit FRS. when this occur, you cannot top up your ma anymore.
If you top up your ma, your ma will hit more quickly. when this occur, you cannot top up more than 8 k anymore.
if you top up your sa, your ma will take a longer time to hit bhs, you can continue to top up more than 8k till you hit bhs.

But there are many people that support amdk. he always encourage ma top up first

who is amdk?

 

[pchan2018]

Hi Folks,

Can i check with the CPF Gurus here on something. For my wife case, she has stopped working and her CPF was depleted to a few thousands (<10K) when we bought our first HDB 8 yrs back. Hence her CPF is quite low and growing on a very slow rate (no regular contribution). If her case continues for sure she will not meet her retirement sum when she reach 55, what exactly will happen with regards to her RA or her CPF monies other than what is published that everything will go to her RA? Are we going to be obligated to pledge our property for her to meet her retirement sum? Or CPF will be ok with what she has at the time that she turns 55 whether or not she meet her retirement sum?

Regards
P

 

[BBCWatcher]

There's a difference in liquidity between MA and SA. MA dollars can be used at any age for certain medical expenses and medical insurance premiums in Singapore, for yourself and for loved ones. MA can also supply some monthly income if you were to become severely disabled at any age. Voluntary Contributions to MA don't reduce future age 55+ RA liquidity below the Full Retirement Sum. That is, with a property pledge/charge you may be able to withdraw more cash from your RA compared to prioritizing SA top ups. And once your MA hits the Basic Healthcare Sum and SA hits the FRS some interesting things happen, in particular MA interest and MA compulsory contributions spill over into OA. OA is liquid for housing at any age.

SA has none of these liquidity features. With rare exceptions you cannot tap SA until age 55+.

These are just basic facts about CPF's liquidity characteristics. You're free to decide how to apply them, but given these characteristics I suggest prioritizing MA VCs if you're a "typical" early to mid career working person.

 

[reddevil0728]

I disagree,

if this is a one time top up, there is no difference. but ma and sa are earning 4%. there is no difference in the rate of return.
if you top up ma, it will hit bhs earlier. additional contribution will overflow into sa.
if you top up sa, you will hit bhs at a later date. but your sa is larger, so there is no difference.

if you intend to top up a max of 8k a year, then there is also no difference, based on the points above.

if you intend to top up more than 8k a year, then topping you sa is better.
For a normal person, the ma will hit bhs much faster than the sa hit FRS. when this occur, you cannot top up your ma anymore.
If you top up your ma, your ma will hit more quickly. when this occur, you cannot top up more than 8 k anymore.
if you top up your sa, your ma will take a longer time to hit bhs, you can continue to top up more than 8k till you hit bhs.

But there are many people that support amdk. he always encourage ma top up first

Before I agree or disagree with your points, can I get your view about topping up SA resulting in the amount being topped up being "locked"?

Because if you top up enough and you end up the topped-up amount + interest being more than FRS at the time of withdrawal, you end up not being able to withdraw the portion that's over FRS that's locked away because of your top-up.

Whereas if you were to top-up MA first and since like you said BHS will be hit regardless just early or late, there will be overflow. and the overflow will not be locked away unlike my earlier example.

I didn't see you covering this aspect, so I am not sure if i missed anything.

 

[zoneguard]

Because if you top up enough and you end up the topped-up amount + interest being more than FRS at the time of withdrawal, you end up not being able to withdraw the portion that's over FRS that's locked away because of your top-up.

CPF stops all SA top-ups at any point in time SA reaches FRS. And the accumulated interest ensures FRS is maintained henceforth. So any excess over FRS after that point can only come from employment(and/or voluntary) contributions to all 3 accounts.

 

[BBCWatcher]

OK, so I've described the "fill MA first" strategy for tax relief. What about the fairly atypical scenario when your family has plenty of liquidity already, and so the liquidity-related advantages of the "fill MA first" strategy don't mean much? A "fill SA first" strategy should result in having a few more total CPF dollars by age 55, and that part is obviously a good thing. However, just be aware under current rules that "fill SA first" means you won't be able to "shield" as many SA dollars as you would with a "fill MA first" strategy. So at age 55 you'd have more total dollars in CPF, but thereafter (depending on how much benefit you can extract from SA shielding, if still available) you might not.

Of course you can also have a hybrid strategy, for example "partially fill MA, then fill SA" where you balance liquidity considerations with total dollar/shielding considerations. Also note that "total dollars in CPF at age 55" isn't quite the same thing as "total dollars." In particular when you have more OA dollars earlier for housing you need less cash for housing (cash which could go into prudent long-term investments) and/or more OA dollars into the CPF Investment Scheme (OA). These additional considerations are why I still lean slightly in favor of "fill MA first" even for people who have plenty of liquidity, but reasonable people can debate this.

Prior to 2022 there were even more considerations since MA VCs were limited to the CPF Annual Limit but MA VC tax relief wasn't limited (except by the overall $80,000 tax relief limit). So that added some wrinkles in how you might play this game best. Now it's a little easier to decide, I'd say.

 

[reddevil0728]

CPF stops all SA top-ups at any point in time SA reaches FRS. And the accumulated interest ensures FRS is maintained henceforth. So any excess over FRS after that point can only come from employment(and/or voluntary) contributions to all 3 accounts.

ah right forgot about that.

But then you also can't shield the top-up amount no? so isn't that inferior?

 

[duhduhduh]

It really depends. take an example of 200k frs

Case 1:
your salary contribution = 100k
your cash top up = 80k
You are right in that the 80k cannot be withdrawn

Case 2:
your salary contribution: 220k
you cash topup = 80k
Then you can withdraw 100k (300k is 100k above frs)
It is up to you to say if this 100k comes 100% your salary contribution, or
this 100k comes from top up (80k) and salary contribution (20k)

i am trying to put what zoneguard has written into simple numbers.

I am confused on the bolded lines???

So if the 100k comes from top up (80k) and salary contribution (20k) - I can still withdraw the 100k?

 

[demoforce1]

I am confused on the bolded lines???

So if the 100k comes from top up (80k) and salary contribution (20k) - I can still withdraw the 100k?

because it is above 200K frs in this sample

 

[Andrew833]

I am confused on the bolded lines???

So if the 100k comes from top up (80k) and salary contribution (20k) - I can still withdraw the 100k?

You need to understand the FRS. Top up will be stuck in FRS, the excess amount above FRS can be withdraw.
FRS (with the top up) will form RA after 55.

 

[dork32]

OK, so I've described the "fill MA first" strategy for tax relief. What about the fairly atypical scenario when your family has plenty of liquidity already, and so the liquidity-related advantages of the "fill MA first" strategy don't mean much? A "fill SA first" strategy should result in having a few more total CPF dollars by age 55, and that part is obviously a good thing. However, just be aware under current rules that "fill SA first" means you won't be able to "shield" as many SA dollars as you would with a "fill MA first" strategy. So at age 55 you'd have more total dollars in CPF, but thereafter (depending on how much benefit you can extract from SA shielding, if still available) you might not.

Of course you can also have a hybrid strategy, for example "partially fill MA, then fill SA" where you balance liquidity considerations with total dollar/shielding considerations. Also note that "total dollars in CPF at age 55" isn't quite the same thing as "total dollars." In particular when you have more OA dollars earlier for housing you need less cash for housing (cash which could go into prudent long-term investments) and/or more OA dollars into the CPF Investment Scheme (OA). These additional considerations are why I still lean slightly in favor of "fill MA first" even for people who have plenty of liquidity, but reasonable people can debate this.

Prior to 2022 there were even more considerations since MA VCs were limited to the CPF Annual Limit but MA VC tax relief wasn't limited (except by the overall $80,000 tax relief limit). So that added some wrinkles in how you might play this game best. Now it's a little easier to decide, I'd say.

good point brought up about the shielding.

point to note, is that there is a sum of 40k that cannot be shielded. if you can use the top up amount to make up this 40k, then there will not be much sa that cannot be shielded.

 

[duhduhduh]

You need to understand the FRS. Top up will be stuck in FRS, the excess amount above FRS can be withdraw.
FRS (with the top up) will form RA after 55.

TY... i went to re-read up on FRS, to summarize, the amount in your OA + SA makes up the sum to determine if you have any excess amount over the BRS/FRS sum.

So the ways we are topping up are as per below:

1. Special / Retirement Account only under the Retirement Sum Topping Up Scheme (RSTU) (tax relief available).
2. All three CPF accounts (no tax relief given)
3. MediSave Account only (tax relief available for Giver)

So to clarify - I am still right to say that the top ups I made under RSTU helps to fulfill the FRS sum. Hence I can meet the FRS sum, but I cannot make a withdrawal of the RSTU monies I topped up at age 55. However, I can do the withdrawal of the lumsup of the monies where those contributions + accrued interest earned during my working years. The RSTU is only allowed to be withdrew during my monthly CPF Life amount.

So back to my original post - I still do not see the benefit of topping up RSTU versus MA....

 

[dork32]

TY... i went to re-read up on FRS, to summarize, the amount in your OA + SA makes up the sum to determine if you have any excess amount over the BRS/FRS sum.

So the ways we are topping up are as per below:

1. Special / Retirement Account only under the Retirement Sum Topping Up Scheme (RSTU) (tax relief available).
2. All three CPF accounts (no tax relief given)
3. MediSave Account only (tax relief available for Giver)

So to clarify - I am still right to say that the top ups I made under RSTU helps to fulfill the FRS sum. Hence I can meet the FRS sum, but I cannot make a withdrawal of the RSTU monies I topped up at age 55. However, I can do the withdrawal of the lumsup of the monies where those contributions + accrued interest earned during my working years. The RSTU is only allowed to be withdrew during my monthly CPF Life amount.

So back to my original post - I still do not see the benefit of topping up RSTU versus MA....

did you see my example on the previous post?

Case 2:
your salary contribution: 220k
you cash topup = 80k
Then you can withdraw 100k (300k is 100k above frs)
It is up to you to say if this 100k comes 100% your salary contribution, or
this 100k comes from top up (80k) and salary contribution (20k)

if you did not do anytop up, then the amount for withdawal is 20k

 

[dork32]

yes rstu amount cannot be withdrawn.

but rstu will allow more of your salary contribution to be withdrawn

 

[item2sell]

yes rstu amount cannot be withdrawn.

but rstu will allow more of your salary contribution to be withdrawn

Can the interest from rstu be withdrawn

 

[fr33d0m]

Can the interest from rstu be withdrawn

no.

 

[demoforce1]

yes rstu amount cannot be withdrawn.

but rstu will allow more of your salary contribution to be withdrawn

will this still correct?

Case 3:
frs: 200k
your salary contribution: 20k
you cash topup = 180k
can withdraw 100k (300k is 100k above frs)?

 

[zoneguard]

Case 3:
frs: 200k
your salary contribution: 20k
you cash topup = 180k
can withdraw 100k (300k is 100k above frs)?

you meant cash topup = 280k?

Anyway, CPF disallows cash top-ups once FRS is reached so case 3 isn't possible as max cash top-up will be 180k.

 

[demoforce1]

you meant cash topup = 280k?

Anyway, CPF disallows cash top-ups once FRS is reached so case 3 isn't possible as max cash top-up will be 180k.

yes, topup 280k
ah, I see, so max only topup 180k, and also only can withdraw 20k for cpf shielding, correct?