CPF chats

[BBCWatcher]

When is a good time to do SA shielding ? A few weeks before turning 55 ?

For a rehearsal (one dollar or whatever the minimum is), probably. Then you can get a pretty good idea how long it takes to get SA funds transferred out in order to time the “real” transfer.

And once we see RA created and funds moved over can put it back immediately ?

Yes, but if you’re going to withdraw surplus OA dollars do that first.

 

[8zaoyu]

Already FRS at age 36. Pump means VC already, MA max also.

Unless you paid up yr HDB BTO property say 700k 4rm in a mature estate by cash, every month u still owe that HDB with accrued interest. Any VC contributions above FRS to basic OA starts earning at least 2.5% compounded without paying the "cuts" of investing using middle "man" or "robo". You let these spare money take the cuts after u are sure earning real monthy or yearly "dividends" not loss of capital invested!

 

[vsvs24]

For a rehearsal (one dollar or whatever the minimum is), probably. Then you can get a pretty good idea how long it takes to get SA funds transferred out in order to time the “real” transfer.

Yes, but if you’re going to withdraw surplus OA dollars do that first.

Good idea to do the test. Thanks !

Yah. Forgot must withdraw whatever I need before putting back to SA.

Clearer now. For now just need to read up on what would have min risk to park SA. Don't want to end up making losses which end up better off not doing SA shield. Still have more than a year to check it up.

 

[oceanicmanta]

Yah. Forgot must withdraw whatever I need before putting back to SA.

hmmm .. what do u mean ? and how to withdraw what u need from OA ?

 

[hwmook]

Good idea to do the test. Thanks !

Yah. Forgot must withdraw whatever I need before putting back to SA.

Clearer now. For now just need to read up on what would have min risk to park SA. Don't want to end up making losses which end up better off not doing SA shield. Still have more than a year to check it up.

SA can only be used to buy low risk funds so you can really lose money from it.

 

[BBCWatcher]

For now just need to read up on what would have min risk to park SA. Don't want to end up making losses which end up better off not doing SA shield. Still have more than a year to check it up.

SA can only be used to buy low risk funds so you can really lose money from it.

Well, even a conservative unit trust’s price can wobble a bit. But you want to choose a unit trust likely to wobble the least. High quality Singapore dollar denominated bond unit trusts should serve nicely in this role over the couple weeks you hold them.

One thing I forgot to mention is that many unit trusts pay dividends, and you don’t want the unit trust to pay any dividends during the week or two you’ll be holding it. So just check the dividend dates as best you can to try to figure out whether a dividend payout is likely during the short time you’ll be holding it.

 

[peppermint7]

and you don’t want the unit trust to pay any dividends during the week or two you’ll be holding it.

Isnt it good for us if they pay dividend?

 

[peppermint7]

hmmm .. what do u mean ? and how to withdraw what u need from OA ?

I think what they mean is
Be4 you transfer the amount shielded back to SA. Do withdraw whatever u need from OA 1st as once the shielded amount returns to SA. Whatever u need to withdraw will have to flow out via SA then followed by OA

 

[rrr2015]

UT/bonds price will fall once dividend paid out. remember for shielding, we want low volatility

Isnt it good for us if they pay dividend?

 

[BBCWatcher]

Isnt it good for us if they pay dividend?

UT/bonds price will fall once dividend paid out. remember for shielding, we want low volatility

Yes, and the dividend will be paid back into your SA. If that happens before your RA is formed and funded, your SA shield was less effective than it could have been.

 

[vsvs24]

I think what they mean is
Be4 you transfer the amount shielded back to SA. Do withdraw whatever u need from OA 1st as once the shielded amount returns to SA. Whatever u need to withdraw will have to flow out via SA then followed by OA

Yes. This is what I mean.

 

[vsvs24]

If I have shares in CPFIS (with DBS) and I hit FRS at 55, will the shares be transferred to CDP and what are the charges for the transfer ? Is this something automatic or I have to initiate it to DBS (or CPF) ?

 

[vsvs24]

Yes, and the dividend will be paid back into your SA. If that happens before your RA is formed and funded, your SA shield was less effective than it could have been.

Thanks.......

 

[abcde83]

If MA max, the excess will go into OA.

Sent from . using GAGT

no. goes to SA 1ST if SA not maxed

 

[crimsontactics]

no. goes to SA 1ST if SA not maxed

He hit FRS liao

Sent from . using GAGT

 

[BBCWatcher]

If I have shares in CPFIS (with DBS) and I hit FRS at 55, will the shares be transferred to CDP and what are the charges for the transfer ? Is this something automatic or I have to initiate it to DBS (or CPF) ?

No, in this case your OA is partially “shielded.”

That’s not necessarily a bad thing since even 2.5% interest is pretty good these days. So what you might do is shield SA, keep your OA shield intact, and then top up your RA when it’s formed — up as high as the Enhanced Retirement Sum if you want. Or if you want to return some CPF Investment Scheme (OA) investments back to OA just before your RA is formed in order to fund your RA that way, that works.

Another possible approach is to release all your CPF Investment Scheme (OA) counters back to OA, raise a SA shield, let your RA get well funded primarily from OA, withdraw OA, reinvest those OA dollars in a lower cost way than the CPF Investment Scheme, and even add some dollars to your RA. The idea here is that the CPF Investment Scheme (OA) is generally quite an expensive way to invest due to the endless fees and high commissions, so even if you want to maintain those investments (or similar) you might decide to exit to greener, lower cost pastures. This’ll depend to some extent on whether you still have compulsory contributions coming into CPF and whether you’ll keep those funds in the traditional accounts.

Slightly complicated, isn’t it? You have quite a bit of flexibility in how you can handle your RA creation and funding.

 

[SamSze]

I have an inquiry regarding RSTU to spouse. I know there is an income threshold, but I am a little confused about the sentence below at both IRAS and CPF website.

Suppose my wife worked in 2019, and had an annual income much more than S$4000. However, she is out of job in 2020, and will remain as SAHM, so she will earn S$0 in 2020 (definitely <S$4000). In this case, can I top up her SA by $7000 this year in 2020, and claim the tax relief next year in 2021 when I file tax? Thanks.


Income Threshold for Spouse/Siblings
To claim tax relief for cash top-ups for your spouse or siblings, the spouse or siblings must not have an annual income exceeding $4,000 in the year preceding the year of top-up.

 

[hwmook]

I have an inquiry regarding RSTU to spouse. I know there is an income threshold, but I am a little confused about the sentence below at both IRAS and CPF website.

Suppose my wife worked in 2019, and had an annual income much more than S$4000. However, she is out of job in 2020, and will remain as SAHM, so she will earn S$0 in 2020 (definitely <S$4000). In this case, can I top up her SA by $7000 this year in 2020, and claim the tax relief next year in 2021 when I file tax? Thanks.


Income Threshold for Spouse/Siblings
To claim tax relief for cash top-ups for your spouse or siblings, the spouse or siblings must not have an annual income exceeding $4,000 in the year preceding the year of top-up.

Its already written clearly there. If your wife income is more than $4000 in 2019 then you cannot claim tax relief for top up. Since your wife income is <$ 4000 this year then you can top up next year to claim relief.

 

[SamSze]

Its already written clearly there. If your wife income is more than $4000 in 2019 then you cannot claim tax relief for top up. Since your wife income is <$ 4000 this year then you can top up next year to claim relief.

I can see it from the sentence, but it is not logic to me. That's why I am feeling confused. In 2019, she worked with contribution to CPF. This year in 2020, no salary and hence no contribution to CPF, and hence it makes sense to have a top-up from spouse to continue contribution to CPF in 2020.

Regardless of her income in 2021, I can top up her SA in 2021 because of she having no income in 2020 and claim the tax relief in 2022?

 

[vsvs24]

No, in this case your OA is partially “shielded.”

That’s not necessarily a bad thing since even 2.5% interest is pretty good these days. So what you might do is shield SA, keep your OA shield intact, and then top up your RA when it’s formed — up as high as the Enhanced Retirement Sum if you want. Or if you want to return some CPF Investment Scheme (OA) investments back to OA just before your RA is formed in order to fund your RA that way, that works.

Another possible approach is to release all your CPF Investment Scheme (OA) counters back to OA, raise a SA shield, let your RA get well funded primarily from OA, withdraw OA, reinvest those OA dollars in a lower cost way than the CPF Investment Scheme, and even add some dollars to your RA. The idea here is that the CPF Investment Scheme (OA) is generally quite an expensive way to invest due to the endless fees and high commissions, so even if you want to maintain those investments (or similar) you might decide to exit to greener, lower cost pastures. This’ll depend to some extent on whether you still have compulsory contributions coming into CPF and whether you’ll keep those funds in the traditional accounts.

Slightly complicated, isn’t it? You have quite a bit of flexibility in how you can handle your RA creation and funding.

My OA and SA are individually more than FRS. Thinking of SA shield. Don't really need to have OA shield. Quite happy as long as RA is mostly transferred from OA and not SA. If allowed, will probably transfer my shares in DBS CPFIS to CDP. No point paying fees to DBS. But not sure how to go about doing it. Will probably check with CPFB or DBS.