CPF Retirement Sum Top Up

[Muneyzmart]

Hi, can anyone advise if RSTU can either go through $7000 top up of special account to self and/or voluntary Top Up to the ceiling amount of $37,740?

I was advised by the CPF officer that I cannot do $7000 top up to self via RSTU the moment I had reached FRS. If they were to include salary contribution towards CPF, it only means we have lesser years to top up $7000 to self.

 

[JuniorLion]

Hi, can anyone advise if RSTU can either go through $7000 top up of special account to self and/or voluntary Top Up to the ceiling amount of $37,740?

I was advised by the CPF officer that I cannot do $7000 top up to self via RSTU the moment I had reached FRS. If they were to include salary contribution towards CPF, it only means we have lesser years to top up $7000 to self.

Before 55, you can do RSTU to your SA until FRS; only $7000 can earn you a tax relief a year.

From age 55 onwards, you can do RTSU to your RA until ERS; if your RA is below FRS, you will get tax relief. If it is above FRS but below ERS, no tax relief. The same $7000 limit applies.

 

[sg_investor]

top up for parent, wife or children. all of them will need you to support any way.

 

[Muneyzmart]

Thank you for your reply.

What I meant was, salary contribution towards CPF is meant as part of RSTU?

I.e $37,740 (VC) * 5% + $7,000 (SA top up) = 10 years to hit FRS.

$7,000 SA yearly top up inclusive of 4% compounded interest will need more than 10 years before hitting FRS.

In the latter option, it allows one to have a higher longevity of tax free up to $7,000 as opposed to the first option.

Before 55, you can do RSTU to your SA until FRS; only $7000 can earn you a tax relief a year.

From age 55 onwards, you can do RTSU to your RA until ERS; if your RA is below FRS, you will get tax relief. If it is above FRS but below ERS, no tax relief. The same $7000 limit applies.

 

[smallfry]

You can do RSTU to your own SA of any amount up till FRS but only $7k has tax relief. Hence, it is not limited by the $37,740 ceiling. Assuming you make more than $6k per month, that means your contribution towards SA is $419.80 monthly. Multiply this by 12 months and adding some bonus, let's say total SA contribution per year is $5500. Now, we add in $7000 RSTU, making a total of $12,500 per year. Not sure how much you have in your SA now but FRS increases by $5k annually, so my guess is unless you do a OA-to-SA transfer, you should be able to do $7k RSTU for 10 years at least. I think for your case, you should look at the FRS purely from the SA point of view because once your SA hits FRS, you cannot do RSTU anymore.

https://www.areyouready.sg/YourInfo...its-that-every-Singaporean-needs-to-know.aspx

HTH.

 

[existence92]

Thank you for your reply.

What I meant was, salary contribution towards CPF is meant as part of RSTU?

I.e $37,740 (VC) * 5% + $7,000 (SA top up) = 10 years to hit FRS.

$7,000 SA yearly top up inclusive of 4% compounded interest will need more than 10 years before hitting FRS.

In the latter option, it allows one to have a higher longevity of tax free up to $7,000 as opposed to the first option.

No. VC limits and RSS/TP are two different limits, except that there are times when they overlap.

E.g. If your special account has hit $171,000 and MA $54,500 this year.

RSS-TP: you cannot top up $7k to gain tax relief as your SA has hit the FRS.
VC-limit: you can top up $37740 - employer and employee contributions = split into OA+SA+MA

No tax relief for contributions to VC- 3 accounts.


The amount that in excess of MA will overflow to SA/OA.
The amount that is supposed to go into SA will still go into SA. =$171,000 + $13k+ = $214k.
OA has no maximum amount at the present moment.

 

[Muneyzmart]

Thank you for your reply.

In short, as long as my SA hits FRS regardless of RSTU or Employee/employer contribution and or VC (if applicable), I will not be able to contribute $7k annually into my SA for tax relief right?

Also, you touched on hitting the ceiling of MA and SA. Supposedly, I had hit the ceiling of both SA for (FRS) and BHS, does it mean my employee/employer contribution will all fall into CPF Ordinary Account?

By the way, what is the abbreviation of ‘TP’ in your explanation?

No. VC limits and RSS/TP are two different limits, except that there are times when they overlap.

E.g. If your special account has hit $171,000 and MA $54,500 this year.

RSS-TP: you cannot top up $7k to gain tax relief as your SA has hit the FRS.
VC-limit: you can top up $37740 - employer and employee contributions = split into OA+SA+MA

No tax relief for contributions to VC- 3 accounts.


The amount that in excess of MA will overflow to SA/OA.
The amount that is supposed to go into SA will still go into SA. =$171,000 + $13k+ = $214k.
OA has no maximum amount at the present moment.

 

[Muneyzmart]

Thank you for your reply, smallfry.

I guess you meant no matter what contributes to my SA, as long as my SA hits FRS, I will not be able to contribute $7k annually into my SA for tax relief.

Initially, I thought RSTU and Employee/Employer contribution and/or VC are mutually exclusive. It seems like they all go into the same channel - CPF Special Account.

It then make sense for me to top up my SA at my later years if I can predict my income to grow in the foreseeable years to have a more material tax benefit as opposed to present.

You can do RSTU to your own SA of any amount up till FRS but only $7k has tax relief. Hence, it is not limited by the $37,740 ceiling. Assuming you make more than $6k per month, that means your contribution towards SA is $419.80 monthly. Multiply this by 12 months and adding some bonus, let's say total SA contribution per year is $5500. Now, we add in $7000 RSTU, making a total of $12,500 per year. Not sure how much you have in your SA now but FRS increases by $5k annually, so my guess is unless you do a OA-to-SA transfer, you should be able to do $7k RSTU for 10 years at least. I think for your case, you should look at the FRS purely from the SA point of view because once your SA hits FRS, you cannot do RSTU anymore.

https://www.areyouready.sg/YourInfo...its-that-every-Singaporean-needs-to-know.aspx

HTH.

 

[JuniorLion]

Thank you for your reply, smallfry.

I guess you meant no matter what contributes to my SA, as long as my SA hits FRS, I will not be able to contribute $7k annually into my SA for tax relief.

Initially, I thought RSTU and Employee/Employer contribution and/or VC are mutually exclusive. It seems like they all go into the same channel - CPF Special Account.

It then make sense for me to top up my SA at my later years if I can predict my income to grow in the foreseeable years to have a more material tax benefit as opposed to present.

With regards to your last sentence in bold, it is a tradeoff between "tax reliefs" and the added interest (compounded over the years). If you top up more in your early years, you will get more interest.

It is possible to perform a mathematical optimization and then arrive at the optimum amount you should contribute every year.

 

[smallfry]

Yes, that's right. As long as your SA hits FRS, you cannot top up any cash or OA-to-SA transfer to your SA anymore (ie. even if you don't need the tax relief). Only your typical monthly SA contributions ($419.80 used in my example) will continue to go into your SA.

Thank you for your reply, smallfry.

I guess you meant no matter what contributes to my SA, as long as my SA hits FRS, I will not be able to contribute $7k annually into my SA for tax relief.

Initially, I thought RSTU and Employee/Employer contribution and/or VC are mutually exclusive. It seems like they all go into the same channel - CPF Special Account.

It then make sense for me to top up my SA at my later years if I can predict my income to grow in the foreseeable years to have a more material tax benefit as opposed to present.

 

[angtc11]

Yes, that's right. As long as your SA hits FRS, you cannot top up any cash or OA-to-SA transfer to your SA anymore (ie. even if you don't need the tax relief). Only your typical monthly SA contributions ($419.80 used in my example) will continue to go into your SA.

Reviving this thread to add a follow on question. My SA balance will meet FRS in 2019 but I want to find out if there is a way to maximize rstu as much as possible.

My idea is to time the rstu to be credited after 1st Jan but before the interest credit on ~4th Jan. In this small window, the FRS would have increased for the new year.

Appreciate if anyone can share if you have done this before? Communication with cpf is a futile exercise...

 

[henrylbh]

Reviving this thread to add a follow on question. My SA balance will meet FRS in 2019 but I want to find out if there is a way to maximize rstu as much as possible.

My idea is to time the rstu to be credited after 1st Jan but before the interest credit on ~4th Jan. In this small window, the FRS would have increased for the new year.

Appreciate if anyone can share if you have done this before? Communication with cpf is a futile exercise...

Firstly, 1 Jan is a holiday and I don't think any CPF transaction on that day would be counted until the next business day.

I don't think you can even specify to CPF that you want any deposit or transaction to be entered on 1 Jan specifically.

Interest during the year would be credited on 31 Dec in the same year and becomes principal on 1 Jan, the next day.

I also think transfer on 4 Jan between the various accounts due to overflows or correction etc would be deemed as taken place on 1 Jan for purpose of interest and balance determination.

 

[angtc11]

Firstly, 1 Jan is a holiday and I don't think any CPF transaction on that day would be counted until the next business day.

I don't think you can even specify to CPF that you want any deposit or transaction to be entered on 1 Jan specifically.

Interest during the year would be credited on 31 Dec in the same year and becomes principal on 1 Jan, the next day.

I also think transfer on 4 Jan between the various accounts due to overflows or correction etc would be deemed as taken place on 1 Jan for purpose of interest and balance determination.

The interest credit is up to 3 working days after the turn of the year IIRC. Recognize that the rstu and interest credit is out of our control. I was hoping to do something like
31st Dec = send rstu instruction, but not the bill payment
1st Jan => FRS increased
1st Jan => do bill payment via internet banking
3rd Jan => rstu credit
4th Jan => interest credit

The public holidays and cpf cutoff time for 2018 rstu further complicates matters, which is why I wanted to see if anyone has orchestrated this sequence before.

 

[henrylbh]

What 4th Jan => interest credit?

Refer to your annual statement. Interest for the year is credited on 31 Dec of the same year and becomes opening balance on 1 Jan. If you log in to my statement - trx history, it will be shown as balance on 1 Jan. Even if interest is credited on 4th Jan, it will be deemed as b/f or 1 Jan as it will become principal for purpose of calculating interest for Jan (as the rule is any credit during the month earns no interest).

 

[angtc11]

What 4th Jan => interest credit?

Refer to your annual statement. Interest for the year is credited on 31 Dec of the same year and becomes opening balance on 1 Jan. If you log in to my statement - trx history, it will be shown as balance on 1 Jan. Even if interest is credited on 4th Jan, it will be deemed as b/f or 1 Jan as it will become principal for purpose of calculating interest for Jan (as the rule is any credit during the month earns no interest).

Do you mean that even if I manage to orchestrate the sequence, my rstu will be considered to happen after the interest credit and hence my rstu will be rejected because FRS is exceeded?

 

[henrylbh]

Do you mean that even if I manage to orchestrate the sequence, my rstu will be considered to happen after the interest credit and hence my rstu will be rejected because FRS is exceeded?

It can't be that the interest earned in the previous year but only credited on 4 Jan the following year earn no interest in Jan.

 

[angtc11]

It can't be that the interest earned in the previous year but only credited on 4 Jan the following year earn no interest in Jan.

The interest credited will be back valued to 31st Dec.
Ie credited on 4th Jan, but start earning interest as of 31 Dec. The 31st Dec balance will be updated to account for the interest on 4th Jan.

I am assuming at 3rd Jan, the SA balance is still not adjusted to account for the interest and hence I can do full rstu. The doubt that you introduced was whether there will be a retrospective action to return my rstu upon adjusting SA balance for the interest.

 

[cscs3]

Hi, can anyone advise if RSTU can either go through $7000 top up of special account to self and/or voluntary Top Up to the ceiling amount of $37,740?

I was advised by the CPF officer that I cannot do $7000 top up to self via RSTU the moment I had reached FRS. If they were to include salary contribution towards CPF, it only means we have lesser years to top up $7000 to self.

I use to mislead by this number $37,740 until I visited CPF office. This number is a nett value ie does not include interest earned. So of you see you statement balance of $37,740 does not means you cannot top up any more. The office can calculate for you if you still able to top up.