CPF after 55

[culture_counter]

But no matter what you try to do, it's not easy to beat inflation. Hard truths.

 

[alantkm]

From CPF website, you can withdraw any amount not just interest anytime after 55 if your RA has hit FRS
https://www.cpf.gov.sg/members/FAQ/...avings+from+55&ajfaqid=2189289&folderid=12854

For those who meet the FRS and has pledged their HDB property so the RA is only BRS, can they also withdrawl any amount from their OA anytime if still continue to work and make contribution to OA, SA and MA?

 

[BBCWatcher]

For those who meet the FRS and has pledged their HDB property so the RA is only BRS...

Let's pause right here. Choosing a Basic Retirement Sum (BRS) level Retirement Account after it was funded to the Full Retirement Sum is synonymous with making a large lump sum withdrawal from your Retirement Account (with a sufficient property pledge/charge in place). The default is the FRS, if your Retirement Account can be funded to the FRS on your 55th birthday.

Please correct me if I'm wrong, but I think what you're asking is "After you've made a large lump sum withdrawal to reduce your RA to the BRS..."

...can they also withdrawl any amount from their OA anytime if still continue to work and make contribution to OA, SA and MA?

Yes, assuming your Retirement Account is funded (BRS with property pledge/charge in your example), starting at age 55 you can make other lump sum withdrawals from your SA and OA, in that order. Yes, even while funds continue to flow in from work-related compulsory contributions and Voluntary Contributions.

 

[demoforce1]

Let's pause right here. Choosing a Basic Retirement Sum (BRS) level Retirement Account after it was funded to the Full Retirement Sum is synonymous with making a large lump sum withdrawal from your Retirement Account (with a sufficient property pledge/charge in place). The default is the FRS, if your Retirement Account can be funded to the FRS on your 55th birthday.

Please correct me if I'm wrong, but I think what you're asking is "After you've made a large lump sum withdrawal to reduce your RA to the BRS..."

Yes, assuming your Retirement Account is funded (BRS with property pledge/charge in your example), starting at age 55 you can make other lump sum withdrawals from your SA and OA, in that order. Yes, even while funds continue to flow in from work-related compulsory contributions and Voluntary Contributions.

and will the Voluntary Contributions of 7K will still get income tax relief?

 

[reddevil0728]

and will the Voluntary Contributions of 7K will still get income tax relief?

are you confusing 7k with retirement sum top up scheme?

 

[henrylbh]

and will the Voluntary Contributions of 7K will still get income tax relief?

Not voluntary contribution, but topping up of up 7k to RA (SA before 55) is eligible for income tax relief, if the amount in RA/SA is less than the prevailing FRS.

 

[demoforce1]

so that's mean, it is a good idea to bring down RA to BRS by pledge HDB

Not voluntary contribution, but topping up of up 7k to RA (SA before 55) is eligible for income tax relief, if the amount in RA/SA is less than the prevailing FRS.

 

[qhong61]

so that's mean, it is a good idea to bring down RA to BRS by pledge HDB

No

 

[henrylbh]

so that's mean, it is a good idea to bring down RA to BRS by pledge HDB

It's not a good idea, but a wrong idea to do that so so as to top up for income tax relief

You have a chance to top up RA/SA to FRS for income tax relief as FRS increases annually.

 

[delpiero_10]

so that's mean, it is a good idea to bring down RA to BRS by pledge HDB

You are considered to have met your FRS if the BRS in your RA + the value of what you have withdrawn from your RA under property pledge adds up to your FRS. Any cash top-up to your RA beyond your FRS does not earn you any tax relief.

Also, do remember once you turn 55, your FRS is fixed. E.g. if you are 55 this year, your FRS is $186k, and the new FRS for those who turn 55 next year ($192k) does not apply to you. What it does, however, is to set a new ERS limit that you can top up to (with no obligation).

E.g. you are able to set aside $186k this year, and decide to top-up your RA to this year's ERS ($279k). When the FRS increases to $192k in 2022, the ERS increases to $288k. You can choose to top up another $9k.

Doing a voluntary contribution to your OA, SA and MA does not earn you tax relief either. But if you do a voluntary contribution to your MA only (provided you have not met the BHS), you get tax relief.

https://www.cpf.gov.sg/members/FAQ/...+for+Employees&ajfaqid=2184960&folderid=11177

 

[BBCWatcher]

Moreover you don't open up any tax relief opportunities by withdrawing from RA. The FRS tax relief limit calculation includes lump sum withdrawals. The ERS top up limit calculation includes lump sum withdrawals, too.

Let's suppose for example you celebrate your 55th birthday and your RA is funded to the FRS. You then decide, "Oh, I'll withdraw $7K from my RA then redeposit $7K for tax relief." Nice idea, but nope, doesn't work. The FRS and ERS limits include the $7K you pulled out. You can put it back in as long as you still have room below the ERS, but there's no tax relief, you've lost at least a month of interest, and you've eaten away at your ERS limit.

However, that said, there is a technique to get some tax relief at age 55. It works like this. Let's suppose you have the following balances just before your 55th birthday:

SA: $250K
OA: $100K

You "shield" $210K of your SA. After releasing your SA shield you then end up with:

SA: $210K
OA: $0
RA: $140K

You then decide to deposit $80K of cash into your RA. That's fine. That fits within the ERS, with room to spare. The first $7K of that $80K is eligible for tax relief because your new RA started below the FRS and (as we can tell from your SA balance) you weren't able to top up your SA with tax relief in the same year.

 

[yoongf]

You have a chance to top up RA/SA to FRS for income tax relief as FRS increases annually.

I am having some trouble understanding this. Maybe my underlying assumptions are wrong.
FRS grows at abt 3.2% a yr. But the SA interest is 4%. If SA is at FRS for more than a yr already, wouldn't the interest alone outrun the annual increase? There won't be any gap for RSTU?

 

[BBCWatcher]

I am having some trouble understanding this. Maybe my underlying assumptions are wrong.
FRS grows at abt 3.2% a yr. But the SA interest is 4%. If SA is at FRS for more than a yr already, wouldn't the interest alone outrun the annual increase? There won't be any gap for RSTU?

Your logic is exactly correct for SA.

However, as soon as you celebrate your 55th birthday your CPF Retirement Account is created. From that point forward you cannot top up your SA even if it's below the FRS. The Retirement Sum Topping Up Scheme flips to your RA. And the FRS and ERS figures apply to RA principal only (less any lump sum withdrawals and monthly payouts -- those are counted against the FRS and ERS for purposes of calculating tax relief eligibility and maximum allowed top up). So you're actually allowed to top up your RA every time the ERS increases, and you can do that for the rest of your life if you wish.

 

[demoforce1]

Moreover you don't open up any tax relief opportunities by withdrawing from RA. The FRS tax relief limit calculation includes lump sum withdrawals. The ERS top up limit calculation includes lump sum withdrawals, too.

Let's suppose for example you celebrate your 55th birthday and your RA is funded to the FRS. You then decide, "Oh, I'll withdraw $7K from my RA then redeposit $7K for tax relief." Nice idea, but nope, doesn't work. The FRS and ERS limits include the $7K you pulled out. You can put it back in as long as you still have room below the ERS, but there's no tax relief, you've lost at least a month of interest, and you've eaten away at your ERS limit.

However, that said, there is a technique to get some tax relief at age 55. It works like this. Let's suppose you have the following balances just before your 55th birthday:

SA: $250K
OA: $100K

You "shield" $210K of your SA. After releasing your SA shield you then end up with:

SA: $210K
OA: $0
RA: $140K

You then decide to deposit $80K of cash into your RA. That's fine. That fits within the ERS, with room to spare. The first $7K of that $80K is eligible for tax relief because your new RA started below the FRS and (as we can tell from your SA balance) you weren't able to top up your SA with tax relief in the same year.

in this case, why need to topup $80K, so I can do $7K RA topup every year for tax relief, is that make sense?

 

[demoforce1]

You are considered to have met your FRS if the BRS in your RA + the value of what you have withdrawn from your RA under property pledge adds up to your FRS. Any cash top-up to your RA beyond your FRS does not earn you any tax relief.

Also, do remember once you turn 55, your FRS is fixed. E.g. if you are 55 this year, your FRS is $186k, and the new FRS for those who turn 55 next year ($192k) does not apply to you. What it does, however, is to set a new ERS limit that you can top up to (with no obligation).

E.g. you are able to set aside $186k this year, and decide to top-up your RA to this year's ERS ($279k). When the FRS increases to $192k in 2022, the ERS increases to $288k. You can choose to top up another $9k.

Doing a voluntary contribution to your OA, SA and MA does not earn you tax relief either. But if you do a voluntary contribution to your MA only (provided you have not met the BHS), you get tax relief.

https://www.cpf.gov.sg/members/FAQ/...+for+Employees&ajfaqid=2184960&folderid=11177

topup MA only also has a limit to yearly CPF contribution, right?

 

[BBCWatcher]

in this case, why need to topup $80K, so I can do $7K RA topup every year for tax relief, is that make sense?

It's an example. You could do that, but would you like 4% interest on $73K of otherwise idle cash? Probably yes!

topup MA only also has a limit to yearly CPF contribution, right?

A Voluntary Contribution to MA must fit within both the CPF Annual Limit and Basic Healthcare Sum. The full amount is eligible for tax relief.

 

[Value.Matrix]

in this case, why need to topup $80K, so I can do $7K RA topup every year for tax relief, is that make sense?

You just raised another way. Do both OA and SA shield, so your RA is funded by $20k from. OA and 40k from SA.

This allows you to fund RA for 1 year, $7,000 for tax relief. Then sell OA investment, to fund RA to ERS. Then finally Sell SA. But that works for 1 year tax relief only.

 

[henrylbh]

You just raised another way. Do both OA and SA shield, so your RA is funded by $20k from. OA and 40k from SA.

This allows you to fund RA for 1 year, $7,000 for tax relief. Then sell OA investment, to fund RA to ERS. Then finally Sell SA. But that works for 1 year tax relief only.

Might as well add that there is also no need to sell OA investment to fund RA and still can top up 7k every year to claim tax relief

 

[demoforce1]

Might as well add that there is also need to sell OA investment to fund RA and still can top up 7k every year to claim tax relief

how about sell OA and SA investment then withdraw? if topup to RA, it will hit FRS already. Then topup RA when close to 65

 

[henrylbh]

how about sell OA and SA investment then withdraw? if topup to RA, it will hit FRS already. Then topup RA when close to 65

Don't think too much.

Best is shield OA/SA to the hilt and cash top up RA to FRS. You will still get tax relief for the cash top up and every subsequent year top-up when FRS is increased, unless you top up to ERS. Tax relief is limited to 7k or the amount of increase in FRS, whichever is lower.