CPF Questions (minimum sum)

[leungchunghong]

First time I heard will flow into OA...you better go and find out more.

No, that other response is not correct.

1. Compulsory Special Account contributions continue to flow into your Special Account.

2. If, in addition, your Medisave Account has reached the Basic Healthcare Sum (BHS), then compulsory Medisave contributions will be redirected to your Ordinary Account.

3. SA interest will stay in SA.

Check your online statement just after your next compulsory SA contribution is made, and you should see #1 in action.

I searched online but no information on what happens if you reached FRS below 55 years old (alot of focus goes to those who are above 55 years old), guess i have to wait till next month to see what happens.

 

[Suleyman]

I searched online but no information on what happens if you reached FRS below 55 years old (alot of focus goes to those who are above 55 years old), guess i have to wait till next month to see what happens.

I am below 55 and my SA has hit the FRS, so this is from personal experience.

It is exactly as BBCWatcher mentioned. The SA component of my monthly contribution from salary as well as the interest from SA balance continues to go into SA. & because my MA has hit the BHS, interest from MA goes into OA, instead of SA.

 

[BBCWatcher]

& because my MA has hit the BHS, interest from MA goes into OA, instead of SA.

This is one area that's unclear (at least to me). Once you've hit the Basic Healthcare Sum, can you make a voluntary top-up (without triggering a refund without interest) to your Medisave Account after the Basic Healthcare Sum (BHS) increases on January 1 (or after a withdrawal), but before compulsory MA contributions arrive -- as long as you have some room below the CPF Annual Limit, and as long as there's no other contribution in process ahead of your voluntary MA contribution? I don't know, but it seems like that's OK according to the written information CPF provides.

It seems odd to me that MA interest wouldn't be credited to MA first, to account for the BHS rise, then overflow into OA. Is that what you're seeing happen, Suleyman -- that the first dollars of interest go into MA as the BHS rises, then any excess interest into OA? Then again, interest is supposedly booked on December 31 (and posted eventually), then the BHS rises on January 1. So maybe that's how it's supposed to work, in that order, but it's weird.

By the way, for those who have not hit the Full Retirement Sum, and who are below age 55, OA funds (including interest) can be converted to SA if desired.

On edit: OK, this is potentially interesting. If the recipient (which could be yourself) is age 55 or older, and if the recipient has not hit the then current Basic Healthcare Sum (BHS) limit, you can transfer OA or SA funds to Medisave using CPF Form MHC-TRF or online equivalent, as long as you've hit the Full Retirement Sum (or Basic Retirement Sum with property pledge). This transfer does not benefit from tax relief, but it is NOT subject to the CPF Annual Limit. OA funds are obviously better for this purpose (lower interest), and you should make this transfer if you're below the CPF Annual Limit and can make a voluntary contribution with cash for tax relief. (Even if that cash comes from OA or SA, which can be withdrawn from age 55 in this case.) But it is a way to bust the CPF Annual Limit if you're 55 or older, it appears.

 

[Suleyman]

This is one area that's unclear (at least to me). Once you've hit the Basic Healthcare Sum, can you make a voluntary top-up (without triggering a refund without interest) to your Medisave Account after the Basic Healthcare Sum (BHS) increases on January 1 (or after a withdrawal), but before compulsory MA contributions arrive -- as long as you have some room below the CPF Annual Limit, and as long as there's no other contribution in process ahead of your voluntary MA contribution? I don't know, but it seems like that's OK according to the written information CPF provides.

It seems odd to me that MA interest wouldn't be credited to MA first, to account for the BHS rise, then overflow into OA. Is that what you're seeing happen, Suleyman -- that the first dollars of interest go into MA as the BHS rises, then any excess interest into OA? Then again, interest is supposedly booked on December 31 (and posted eventually), then the BHS rises on January 1. So maybe that's how it's supposed to work, in that order, but it's weird.

By the way, for those who have not hit the Full Retirement Sum, and who are below age 55, OA funds (including interest) can be converted to SA if desired.

On edit: OK, this is potentially interesting. If the recipient (which could be yourself) is age 55 or older, and if the recipient has not hit the then current Basic Healthcare Sum (BHS) limit, you can transfer OA or SA funds to Medisave using CPF Form MHC-TRF or online equivalent, as long as you've hit the Full Retirement Sum (or Basic Retirement Sum with property pledge). This transfer does not benefit from tax relief, but it is NOT subject to the CPF Annual Limit. OA funds are obviously better for this purpose (lower interest), and you should make this transfer if you're below the CPF Annual Limit and can make a voluntary contribution with cash for tax relief. (Even if that cash comes from OA or SA, which can be withdrawn from age 55 in this case.) But it is a way to bust the CPF Annual Limit if you're 55 or older, it appears.

My observation of my MA is as follows, assuming your MA is at BHS before the end of the year.
- 31/12 CPF will credit $X to my MA as interest
- 1/1 BHS increases
- a few days later, CPF will deduct $X from my MA & transfer to SA/OA

I presume it happens this way because technically on the 31/12, the interest will still result in a balance above the BHS.

So, there is actually a small window between the 1/1 and whichever day of the month your monthly contribution from your employment comes in to top up your Medisave account to the new BHS.

The only reason to do this, of course, is if you want the tax savings from that $1k+ top up, which depending on your tax bracket may or may not be worth the hassle to do this.

 

[BBCWatcher]

So, there is actually a small window between the 1/1 and whichever day of the month your monthly contribution from your employment comes in to top up your Medisave account to the new BHS.

Also a small window after any Medisave withdrawal, such as MediShield Life/Integrated Shield premium payments.

I believe the rule is pretty simple here, that if you have room below the CPF Annual Limit and if there's no compulsory MA contribution pending, you can swoop in and make a voluntary MA top-up, up to the BHS, with tax relief. I might be able to test that hypothesis soon.

If you don't have room below the CPF Annual Limit, and if you're age 55 or above, then an OA transfer to your own MA is possible.

Now that I think about it, I don't know why you'd ever transfer SA to your own MA. Those particular SA funds are high yielding "on demand" funds from age 55, and stuffing them into MA would restrict them with no additional interest. That would never make sense. The only time SA to MA would make sense is if you're under 55, the recipient is 55 or older, you've hit the FRS (or BRS with property pledge), and you're trying to tap SA funds early because you absolutely need the money for somebody else's medical bills. That particular combination is pretty rare.

The only reason to do this, of course, is if you want the tax savings from that $1k+ top up, which depending on your tax bracket may or may not be worth the hassle to do this.

I don't think it's much hassle. Even in the 2% tax bracket it'd be worth doing. And it'd be more like $2,000 of top-up, at current/next BHS levels, so $40 of tax savings, plus some better interest. (Could be more tax savings after a Medisave withdrawal.) That's worth 5 minutes logging into your CPF account and using e-Cashier, I'd say.

 

[Suleyman]

Also a small window after any Medisave withdrawal, such as MediShield Life/Integrated Shield premium payments.

If you are going to do this, might as well opt to pay for your premiums by cash.

 

[BBCWatcher]

If you are going to do this, might as well opt to pay for your premiums by cash.

I don't think you're allowed to do that. Medishield qualified premiums must try to draw first from Medisave, as I understand it.

But even if you could do that, no, you wouldn't want to do that. A Medishield Account top-up comes with tax relief (pre-tax money), and cash is post-tax. Paying those premiums from Medishield means you can claim some more tax relief, and that's good. Medishield funds are also restricted and cash isn't, so that's a bonus, to be able to spend those MA funds.

This also means that you can play some games with who in the household assumes insurance premiums (and Medishield withdrawals) for other members of the household. The individual in the higher tax bracket is usually the person who should assume those insurance premiums, unless and until that person has no more room below his/her CPF Annual Limit. Then another individual in the household might partially or fully assume that responsibility. That's a tricky bit of tax/Medishield optimization to pull off, but it's possible.

 

[sgdividends]

I am below 55 and my SA has hit the FRS, so this is from personal experience.

It is exactly as BBCWatcher mentioned. The SA component of my monthly contribution from salary as well as the interest from SA balance continues to go into SA. & because my MA has hit the BHS, interest from MA goes into OA, instead of SA.

Thanks Suleyman and BBC

Contribution in excess of MA ceiling goes into OA

Interest in excess of MA ceiling goes in OA.

Didn't know the second point

 

[BBCWatcher]

Contribution in excess of MA ceiling goes into OA

For somebody working in Singapore and under the age of 55, compulsory MA contributions follow this flow:

(a) If the worker's MA has not yet reached the Basic Healthcare Sum (BHS), the MA contribution goes into MA;

(b) If the worker's MA has reached the BHS but the worker's Special Account has not yet reached the Full Retirement Sum, the MA contribution spills into SA;

(c) If both MA and SA are "full" (MA=BHS or higher, SA=FRS or higher), then the MA contribution spills into OA.

See here for details (FAQ -> Basic Healthcare Sum and Medisave Contributions -> "I have saved the Basic Healthcare Sum in my Medisave Account. What happens to my Medisave contributions?").

I see a very interesting detail there, and it's well worth paying attention to for those approaching age 55 who have BHS-level Medisave Accounts. According to the information CPF posts, if you opt for the Basic Retirement Sum (BRS) with property pledge, then if your MA is "full" (hit the BHS, which is fixed from age 55) your compulsory MA contributions will attempt to flow into your RA first, up to the BRS. Then, if your RA has hit the BRS, they will flow into your OA.

I think you can still make cash top-ups to your RA, with tax relief, if it's below the FRS, even if you opt for the BRS. So if you're planning to make those cash top-ups, great. But otherwise (or maybe even if you're going to make top-ups), you might want to rethink choosing the BRS, if your MA is full. This isn't a very common scenario, but I suppose it's possible. For example, if you became a PR not too long before age 55 and then made voluntary top-up contributions to your MA, you might have a big MA relative to your other CPF subaccounts, and so you could end up in this particular situation.

 

[dork32]

If you are going to do this, might as well opt to pay for your premiums by cash.

eg i have cash $100, premium 100, oa/sa 0, contribution to ma is 500. ma is max

if i use cash to pay premium, and after one month
cash = 0
premium paid
oa/sa = 500 coz ma overflow into oa/sa.

if i use ma to pay premium and top up oa/sa.
cash = 0
premium paid
oa/sa = 500, 400 overflow from ma and 100 from topup

so paying premium with cash for many of us is not different from putting topping my oa/sa.

the only difference is the 2.5% vs the 4% of interest on the premium for 1 month which i dont mind giving to the garmen.

 

[BBCWatcher]

if i use cash to pay premium, and after one month

As far as I know you're not actually allowed to use cash for Medisave-qualified premiums if you have enough Medisave funds, and you probably wouldn't want to use cash even if you could. Medisave funds are restricted, and additional tax relief with voluntary top-ups is often possible.

 

[kuti-kuti]

Sorry to bump this old thread... but I got a CPF retirement question to ask.

My mom turned 55 this year, and she met her FRS.
I understand the OA and SA accounts continues to offer good interest rates compared to banks' saving accounts. Having said that, am I allowed to top up her OA account using my cash?

Let's say I wish to top up $1k to her OA account to enjoy the interest rates. Will the full 1k goes to the OA account, or will CPF board splits the amount between the OA, SA and MA account?

Thanks.

 

[tangent314]

So yes, if you do a VC, it will be split between the 3 accounts. Which is a good thing anyway. After 55 you would prefer to have the money in SA than in OA. Note that VC has an annual limit of 37k. Also, she may want to consider topping RA up to the ERS.

 

[zuppeur]

I hit above FRS.

As of 1 Jan 2019,my MA is $54500.i am thinking of topping up my MA to $57200.

Will there be any circumstances that my top up will me refunded without interest, considering there will be mandatory monthly contribution into my MA.

Is it all the mandatory contribution to MA will overflow to OA since I have top up my BHS

 

[kehyi4]

I hit above FRS.

As of 1 Jan 2019,my MA is $54500.i am thinking of topping up my MA to $57200.

Will there be any circumstances that my top up will me refunded without interest, considering there will be mandatory monthly contribution into my MA.

Is it all the mandatory contribution to MA will overflow to OA since I have top up my BHS

* Voluntary Contribution to Medisave Account (VC-MA) is subject to CPF Annual Limit. If your CPF from employment for the whole year hits $37,740, then whatever you VC-MA will be refunded to you without interest

* Since MA = BHS and SA > FRS, MA will overflow into OA

 

[cal3135]

Am reviewing on this also.
Checking Annual limit

I hit above FRS.

As of 1 Jan 2019,my MA is $54500.i am thinking of topping up my MA to $57200.

Will there be any circumstances that my top up will me refunded without interest, considering there will be mandatory monthly contribution into my MA.

Is it all the mandatory contribution to MA will overflow to OA since I have top up my BHS

 

[hwarzoner]

Am reviewing on this also.
Checking Annual limit

How to top up ma to 57200?

 

[czhmech]

A question. Let's say if your SA reached FRS at the end of 2018 ($171k), are you able to do RSTU early in the year to the FRS amount in 2019 ($176k)?

 

[nautilus]

A question. Let's say if your SA reached FRS at the end of 2018 ($171k), are you able to do RSTU early in the year to the FRS amount in 2019 ($176k)?

Yes you may top up 5K under RSTU to $176K. The trick is to do it before the 15th of Jan.

 

[Gamma~]

I am a salaried employee without bonus, under 55. I have been doing $7k SA top up and (balance of $37740) for MA top up for the purpose of tax relief every year.

Now that my MA has reached $54.5k (will top up $2.7k soon), does it mean i have no other mean to top up for tax relief already?

No grandparents/parents/siblings/spouse here.