CPF SA

[dork32]

Everybody’s mileage may vary. What might not be ideal to you doesn’t mean it isn’t ideal to others ma.

very correct. this is why i used the word most and not all. there will always be outliers.

 

[BBCWatcher]

2) I understand that upon reaching 55, an RA will be created. Money from SA will be moved to RA first before OA. As SA and RA has the same interest, and you can’t top up SA anymore once RA is created, you would want to avoid that situation and use the shield so that money from your OA will go into your RA first, so that you can have 2 pots of gold.

Am I missing something?

When you top up your Retirement Account via the RSTU Scheme those funds, plus accrued interest, cannot be used for CPF Investment Scheme purposes. That distinction doesn’t matter when the funds amount to $40,000 or less at age 54.9 since $40,000 cannot be “shielded.” But it could matter otherwise.

I don’t think this distinction is too important, but as a “tie breaker” it might be.

3) also since we are on this topic of shielding, I understand that there is another “shielding”, i.e. if you are using CPF for housing loan, they will wipe out your entire OA and the maximum you can leave in your OA is 20k. If you have the liquidity and would rather enjoy the higher interest rather provided by CPF and pay any housing loan with cash, what you can do is to move any OA amount above OA into your SA, so that you don’t have to use CPF for servicing your housing loan.

That’s right, and to preserve this option, or more of it, your Special Account cannot be “too full.” There’s no such problem with MA.

most people, early in their career will not have much cash to top up. you will paying your study loan, your wedding, your car, your hdb. and also, most of our salary is not very high early in the career. this statement is irrelevant to many of us.

This discussion already assumes you have at least one dollar available for MA and/or SA top ups, and you qualify for tax relief. If you’re not going to add a dollar to either, you’re not going to add a dollar to either. But, if you are, how should you prioritize the next dollar? That’s the question.

this statement is correct for the young. but our garmen do not allow indiscriminate use of ma. i have used my ma for delivery for both kids and a number of minor operations. my ma is still at bhs.

That’s correct, but the government also doesn’t allow indiscriminate use of SA funds. In fact, the government allows almost no use of SA prior to age 55. We’re talking about early career here — age 30, let’s suppose — and MA is clearly more liquid than SA. I would also point out this cohort now has CareShield Life premiums ahead of them, and MA dollars can also be spent (to applicable limits) on care for elders and other qualified family members, and their premiums.

you can check out with many here. if they are in their mid 30s or older, they would have maxed out bhs.

That can happen, but that’s an excellent reason to squeeze in MA tax reliefs first, while that’s still possible. (However, even at the BHS you still might be able to squeeze in some tax reliefs, although that gets harder as you progress in your career and get closer to or reach the CPF Annual Limit. See how this all fits together?)

in other words, our ma is a big overkill for most of us. topping up ma would be topping up into the irrelevant portion of the fund. yes, i know that ma will overflow into sa once it is max.

Right, and you just agreed that it’s close to inevitable that MA will reach the BHS. So the basic idea is to strike while you can: take the tax relief first that’s harder to claim later. (You might also claim SA tax relief, even in the same year, if you’ve got additional dollars. This is just about prioritization for the next dollar you’ve already decided you’re allocating to CPF.) SA tax reliefs are strictly limited to $7,000/year, so they’re “gated.” But with no CPF Annual Limit constraint. They are less difficult to claim secondarily.

 

[dork32]

When you top up your Retirement Account via the RSTU Scheme those funds, plus accrued interest, cannot be used for CPF Investment Scheme purposes. That distinction doesn’t matter when the funds amount to $40,000 or less at age 54.9 since $40,000 cannot be “shielded.” But it could matter otherwise.

I don’t think this distinction is too important, but as a “tie breaker” it might be.


That’s right, and to preserve this option, or more of it, your Special Account cannot be “too full.” There’s no such problem with MA.


This discussion already assumes you have at least one dollar available for MA and/or SA top ups, and you qualify for tax relief. If you’re not going to add a dollar to either, you’re not going to add a dollar to either. But, if you are, how should you prioritize the next dollar? That’s the question.


That’s correct, but the government also doesn’t allow indiscriminate use of SA funds. In fact, the government allows almost no use of SA prior to age 55. We’re talking about early career here — age 30, let’s suppose — and MA is clearly more liquid than SA. I would also point out this cohort now has CareShield Life premiums ahead of them, and MA dollars can also be spent (to applicable limits) on care for elders and other qualified family members, and their premiums.


That can happen, but that’s an excellent reason to squeeze in MA tax reliefs first, while that’s still possible. (However, even at the BHS you still might be able to squeeze in some tax reliefs, although that gets harder as you progress in your career and get closer to or reach the CPF Annual Limit. See how this all fits together?)


Right, and you just agreed that it’s close to inevitable that MA will reach the BHS. So the basic idea is to strike while you can: take the tax relief first that’s harder to claim later. (You might also claim SA tax relief, even in the same year, if you’ve got additional dollars. This is just about prioritization for the next dollar you’ve already decided you’re allocating to CPF.) SA tax reliefs are strictly limited to $7,000/year, so they’re “gated.” But with no CPF Annual Limit constraint. They are less difficult to claim secondarily.

yes, early in the career, you may want to put in you ma first.

but like i said, early in the career, you do not have much money. after 10 year of working, i only had 50k of liquid asset. the next 10 years of my working, i was able to accumulate another 400k of liquid asset. it is only that when i start to build up that i am confident to put some into my cpf. by that time my ma reached bhs many times over. i am a typical salaried worker.

 

[reddevil0728]

yes, early in the career, you may want to put in you ma first.

but like i said, early in the career, you do not have much money. after 10 year of working, i only had 50k of liquid asset. the next 10 years of my working, i was able to accumulate another 400k of liquid asset. it is only that when i start to build up that i am confident to put some into my cpf. by that time my ma reached bhs many times over. i am a typical salaried worker.

Maybe it should be reframed as...

"What if early in your career you have money". Since you are making that assumption that "you do not have much money", there can always be another assumption made that "you do have much money"

If you have the money, what will you do? If you are still saying you wouldn't contribute to MA, then whatever you are arguing is arguing for the sake of arguing that MA should not be top-up.

 

[dork32]

This discussion already assumes you have at least one dollar available for MA and/or SA top ups, and you qualify for tax relief. If you’re not going to add a dollar to either, you’re not going to add a dollar to either. But, if you are, how should you prioritize the next dollar? That’s the question.

i already mentioned, if you have $1 available for top up, it really does not matter where you top up. sa and ma will have the same effect.

it is when you want to top up $7001, you must at least top up $1 into your ma.

yeah you are right, if you are in urgent need of your ma dollars for your hospitalization bill, ma is a better choice. most of us have more than enough ma to cover the hospitalization. that $1 topped is probably for retirement.

 

[dork32]

Maybe it should be reframed as...

"What if early in your career you have money". Since you are making that assumption that "you do not have much money", there can always be another assumption made that "you do have much money"

If you have the money, what will you do? If you are still saying you wouldn't contribute to MA, then whatever you are arguing is arguing for the sake of arguing that MA should not be top-up.

of course, all this topping up occurs only if you have money. and i am tokking about most. i have colleagues that have parents that are so rich that they are still getting a sizable allowance from parents at the age of 50.

no i am not arguing that ma should not be topped up. i am arguing that topping ma and sa has no difference in the effect.

 

[dork32]

of course, all this topping up occurs only if you have money. and i am tokking about most. i have colleagues that have parents that are so rich that they are still getting a sizable allowance from parents at the age of 50.

no i am not arguing that ma should not be topped up. i am arguing that topping ma and sa has no difference in the effect.

the other thing about topping ma is this. if you exceed one of the limits late in that year, they will refund the portion that exceeds without interest to you.if you rstu 7k, you can be sure that you will not be refunded.

even a civil service guy like me has fluctuations in bonus and ot pay, it will be difficult to predict what is the exact total contribution.

 

[reddevil0728]

of course, all this topping up occurs only if you have money. and i am tokking about most. i have colleagues that have parents that are so rich that they are still getting a sizable allowance from parents at the age of 50.

no i am not arguing that ma should not be topped up. i am arguing that topping ma and sa has no difference in the effect.

hence i mentioned earlier, there's a difference between what's idealistic and realistic. Knowing what's the "best" way one can do something first (idealistic), then work towards what is realistic for self.

If we start with "realistic", then those ppl who might be able to be slightly "better" than most may not be able to realise how they can possibly do better.

 

[reddevil0728]

the other thing about topping ma is this. if you exceed one of the limits late in that year, they will refund the portion that exceeds without interest to you.if you rstu 7k, you can be sure that you will not be refunded.

even a civil service guy like me has fluctuations in bonus and ot pay, it will be difficult to predict what is the exact total contribution.

Nobody stopping you to make a project, or simply just top up with sufficient room at the end of the year, with the remaining going into SA top-up.

What you are suggesting is a very personal thing. There's a lot of things you can do to overcome it. like do projection/make assumptions.

What you are suggesting is simply saying, it is too tough for you, you just want to run away from the problem.

 

[dork32]

Nobody stopping you to make a project, or simply just top up with sufficient room at the end of the year, with the remaining going into SA top-up.

What you are suggesting is a very personal thing. There's a lot of things you can do to overcome it. like do projection/make assumptions.

What you are suggesting is simply saying, it is too tough for you, you just want to run away from the problem.

top up at the end of the year, you will lose 1 year of interest. this would be compounded over 30 years. why not top the sa 7k first at the start of the year? at the end of the year, then top up the ma to the limits?

what run away from problem? i have more than 500+k in my cpf now. my annual contribution is more than 37k. i dont have any problems with top up because i cannot do it anymore. for your info, i have never topped up in my life. i am just employed everyday since i graduated.

i did not do any projection. i am just looking back at my life to do some reflection. looking back, i did not regret not topping up. if i have done so, i may not have enough for my 4th property

 

[dork32]

What you are suggesting is a very personal thing. There's a lot of things you can do to overcome it. like do projection/make assumptions.

what i am suggesting is not personal. the majority of the people are like me. yes, there will be outliers. people that have a million when they are 25, or people that are still earning 1.5k at the age of 50.

 

[Andrew833]

Never say salary not much.....
How old are you btw?

5 years to withdraw my cpf money
That's why now doing alot of calculating and planning.

 

[dork32]

hence i mentioned earlier, there's a difference between what's idealistic and realistic. Knowing what's the "best" way one can do something first (idealistic), then work towards what is realistic for self.

If we start with "realistic", then those ppl who might be able to be slightly "better" than most may not be able to realise how they can possibly do better.

idealistic is i have so much money at 25 that i dont know where to put it. realistic is that i dont.

you want to know what is idealistic? top up your sa all the way to frs. who cares about tax relief? your interest earn more than covers your tax relief.

to me, it is down to earth realistic and you consider the options that are available realistically. also idealistic options cannot be executed most of the time

 

[reddevil0728]

top up at the end of the year, you will lose 1 year of interest. this would be compounded over 30 years. why not top the sa 7k first at the start of the year? at the end of the year, then top up the ma to the limits?

what run away from problem? i have more than 500+k in my cpf now. my annual contribution is more than 37k. i dont have any problems with top up because i cannot do it anymore. for your info, i have never topped up in my life. i am just employed everyday since i graduated.

i did not do any projection. i am just looking back at my life to do some reflection. looking back, i did not regret not topping up. if i have done so, i may not have enough for my 4th property

Then make a projection first? Since we are talking about someone in their early career, they will kind of have an idea how far away they are away from their cap, their salary don’t suddenly jump to hit the cap, and if they can suddenly get 20-30k in bonuses, then this is no longer a concern no? No one say they can’t top up SA first if they wish to, and top up whatever is the excess into MA at the end of the year

Ya that’s for you at your age ma, we are talking about early career right? What if someone wants to do better than what you did? You block them meh?

And whatever you are doing is back testing, you don’t regret is fine, but some people just want to do better than what you did as they maybe more greedy than you? No?

 

[reddevil0728]

what i am suggesting is not personal. the majority of the people are like me. yes, there will be outliers. people that have a million when they are 25, or people that are still earning 1.5k at the age of 50.

Yep. So should information only cater to “most” or can information also be catered for people to the “some”? If we can cover all basis, why not?

 

[reddevil0728]

idealistic is i have so much money at 25 that i dont know where to put it. realistic is that i dont.

you want to know what is idealistic? top up your sa all the way to frs. who cares about tax relief? your interest earn more than covers your tax relief.

to me, it is down to earth realistic and you consider the options that are available realistically. also idealistic options cannot be executed most of the time

One can always present information on a spectrum. Idealistic to realistic. And each individual can pick somewhere in the middle that suits one.

Your suggestion of ignoring tax Relief makes sense too since the interest will make up for it. That can be a consideration so why not present it rather than having information catering to just the “most” and not “all”?

 

[dork32]

Then make a projection first? Since we are talking about someone in their early career, they will kind of have an idea how far away they are away from their cap, their salary don’t suddenly jump to hit the cap, and if they can suddenly get 20-30k in bonuses, then this is no longer a concern no? No one say they can’t top up SA first if they wish to, and top up whatever is the excess into MA at the end of the year

Ya that’s for you at your age ma, we are talking about early career right? What if someone wants to do better than what you did? You block them meh?

And whatever you are doing is back testing, you don’t regret is fine, but some people just want to do better than what you did as they maybe more greedy than you? No?

i already say many times, i am not telling them not to top up. if you are comfortable, you can top up any time in the year. top up your sa first. at the end of the year, if there are gaps for ma top up then do it.

you also mentioned that everyone is different. i did not top up. i prefer to keep liquid assets to buy properties, dabble in shares and i dont really believe in aaa rated 30 year bonds. if you prefer to top up, there is nothing wrong with it. it is just topping up ma and sa is no different for most of the cases

 

[dork32]

Your suggestion of ignoring tax Relief makes sense too since the interest will make up for it. That can be a consideration so why not present it rather than having information catering to just the “most” and not “all”?

not all because there are people that have 180k to spare at the age of 25. most of us dont. and if you dont, why bother about this option of topping 180k at the age of 25?

 

[dork32]

No one say they can’t top up SA first if they wish to, and top up whatever is the excess into MA at the end of the year

exactly, this should be that way to go.

wait top up which account first? sa, right?

this wat i said, it does not matter, sa or ma

 

[BBCWatcher]

so generally I am on the right track based on what I said above?

It appears so.

yes, early in the career, you may want to put in you ma first.

Sure. The core assumption here is you've got at least one discretionary savings dollar you'd like to deposit into CPF with tax relief.

Please note that "early career" is shorthand, a generalization. For example, new Permanent Residents might be mid-career, but they're early in their CPF "career."

One ordinary, perfectly normal condition for MA top ups is that you have high confidence you won't exceed the CPF Annual Limit, of course. New PRs are among those in this category. This factor is also part of what makes MA top ups "hard" versus SA top ups, hence it's usually easier earlier in one's career to make MA top ups with tax relief.